Mineralfields Bill Koenig"TER: Getting back to what you do every day—what kind of criteria do you
use in making the selections for your portfolios?
BK: Management experience and land position are very important to us. We
tend to do rankings based on both before we invest. With respect to management
experience, we would want to see people who have been there and successfully
explored and found profitable assets.
On the land side, we’re looking for either a dominant land position on a new
concept or simply an extensive land position. If they don’t have that, what we
would like to see is if they’re adjacent to hot new exploration areas where
chances are the exploration will spill over onto their lands. Typically, the
companies that we’re investing in do not have earnings. It’s an all-or-nothing
investment; either they hit with their exploration or they don’t. That’s the
nature of the beast for our investment process.
We do look at other factors like share structure, and the financial shape of
the company. The key to all of this is the ability of the company to properly
release news on a regular basis on what they’re up to, just so other investors
can stay tuned and follow the progress. The last thing we want to do is invest
in a company that plays, “I’ve Got a Secret.”
TER: Do you buy stocks expecting a catalyst and exit once that’s
achieved? Or do you enter for the long-term?
BK: Because we roll our funds over on a fairly consistent basis, a lot
of our investors want to be in for the tax deduction but don’t want to hold
mutual funds. What they will do on a rollover is liquidate their position and
buy more flow-through funds for the tax deduction. As a result, it puts us in a
situation where, in a mutual fund, we will have to liquidate positions on a
regular basis and we high grade the winners and sell off the ones that are
marginal or have had neutral results.