Part 2 — Counter-Cyclical Kings of Australian Gold | Australian Markets

Final week, I detailed my personal expertise from working inside the world’s largest gold miner (Barrick) and watching the company’s demise.

You may revisit that piece right here.

That have taught me some key insights…

Most significantly, it taught me the significance of investing alongside the commodity cycle.

And from demise to alternative…Barrick’s failure opened the door to a brand-new entrant in Australian gold mining.

One that may go on to turn into the nation’s largest!

So, sit back and skim on.

As a result of at the moment, we’ll unlock the secrets and techniques behind why some miners fail miserably whereas others wildly succeed.

Profitable CEOs perceive
the Commodity Cycle

Shifting back to Zambia and my time with Equinox Minerals.

I’ve little doubt that Equinox’s CEO understood the commodity cycle intimately.

He and one other geologist established the company within the late Nineties and constructed it up via the upward leg of the commodity growth within the early 2000s.

In the end, he was building his company to secure a purchaser on the prime of the market.

And his timing was spot on…

As I wrote in final week’s piece, Equinox’s CEO secured a purchaser simply a few weeks after copper reached its all-time high in 2011.

And I consider the timing got here down to an intimate understanding of the cycle.

You see, this Equinox CEO held a wage simply a fraction of Barricks’s chief.

With out the legions of legal professionals, financial and financial advisors just like the world’s largest gold miner had on the time.

But his data and understanding of the cycle made him infinitely more beneficial to these buyers who backed his company.

And as one CEO exited the market at a prime time, one other was paying dearly.

As I highlighted final week, issues started to unravel when Barrick realised its mistake.

I do know, I used to be there!

I made a decision to stay with Barrick after it purchased out Equinox.

And that gave me one other beneficial insight…

I went from watching Equinox’s profitable growth story to observing the demise of the world’s largest gold miner.

And within a few months, Barrick pivoted from a manic purchaser to a panic vendor!

Promoting off international property, together with key mines throughout Australia.

And that’s the place we step into Half II of this boom-to-bust story.

The demise of the world’s largest gold miner gave delivery to a new entrant in Australian mining…

A new giant emerges

Half II is set within the Jap Goldfields of Western Australia.

Few people know that the Canadian-owned Barrick was as soon as a main stakeholder within the development of gold mines throughout the world-famous Jap Goldfields.

For years, Barrick invested closely in exploration and new mine developments throughout this area.

However the one reminiscence of that at the moment is a few rusty Barrick indicators flapping within the wind on some distant exploration observe.

So, why take you back right here?

Properly, within the wake of its Equinox catastrophe in 2011, Barrick was seeking to offload property at any price. It was 2014, and gold costs have been plummeting.

Barrick’s shareholders have been overtly cursing executives at shareholder conferences; not solely had the world’s largest gold miner made the error of ‘diversifying’ into a new commodity, copper…

But it surely had performed so on the very peak of the market!

This could mark the start of Barrick’s demise.

In response, the gold miner quickly offloaded its huge treasure trove of international gold mines.

Operations it had spent many years discovering and developing… These have been thrown into the market nearly in a single day!

The company panicked because it tried to protect money and appease shareholders.

However similar to its horrible resolution to buy on the prime of the market, Barrick was making one other fateful mistake…this time, it was promoting on the very backside!

The Rise of Australia’s Greatest Gold Miner

And recognising the concern and alternative, a small group of Aussie discount hunters emerged…

An unknown mining engineer known as Invoice Beament and two of his former engineering mates swindled a deal that may create a life-changing alternative.

They bought Barrick’s Western Australian tasks for a steal…three mines for three million ounces of gold, plus infrastructure.

All for the paltry sum of $100 million in money!

The acquisition value the trio a measly $30 an ounce.

A counter-cyclical guess that may go down in mining folklore.

Catapulting an unknown penny stock into what would turn into Australia’s largest gold miner: Northern Star.

Elements I and II of this story clearly show how the commodity cycle can pulverise those that fail to watch it.

Whereas gifting those that pay close consideration.

As an investor, it pays to check the calamitous rises and falls that happen via booms and busts throughout financial cycles.

I used to be fortunate enough to be on the ground and see this take form first-hand.

And from what I’ve noticed, titles and educational credentials make little distinction…

Most company executives pay more consideration to the each day news feed, shopping for when circumstances turn into feverish and promoting or halting growth because the market slows.

In different phrases, they’re doing the alternative of what good buyers ought to do.

Given all the pieces I’ve outlined, it pays to invest alongside the small group of ‘counter-cyclical’ movers…

These with a confirmed means to learn the market and act opposite to the bulk.

That’s one of our key methods at
Diggers and Drillers

D&D is a service that recommends shares throughout mining and exploration, the place I take advantage of the commodity cycle to align our investments.

And on that notice, so does my colleague Brian Chu.

Brian’s simply completed placing collectively a presentation focusing particularly on how gold shares transfer in line with cyclical patterns within the valuable metals market.

To search out out more, you are able to do so right here.

Get pleasure from!

Regards,

James Cooper,
Editor, Mining: Section One and Diggers and Drillers