Oskar Lewnowski, Orion Resource Partners — The Man Behind an $8 Billion Mining Investment Firm (#60)

Resource Insider

Oskar Lewnowski, Orion Resource Partners — The Man Behind an $8 Billion Mining Investment Firm (#60)

This is the first long form interview with the man who built the world’s largest mining private equity firm: Oskar Lewnowski.

Over the last decade, Orion Resource Partners has gone from startup financier to the world’s dominant mining investment firm.

There is very little information about Orion publicly available, and Oskar has never done a podcast before. After meeting last year, he agreed to sit down with me for an interview and take us behind the curtain.

As public markets plunge into increased volatility, private equity investing is delivering some of the highest returns for the investors. Understanding the Orion strategy will be critical to any resource investor looking to capitalize on the commodity boom currently underway.

In this interview with Oskar, I’ll show you:

  • The Big Bet: The single commodity Oskar would invest in if he could only make one big bet.

  • The Orion Strategy: Inside Orion Resource Partners’ all-encompassing approach to delivering returns in the mining and metals sector.

  • The Magic of Accountability: The innovative financing model that ensures projects stay on track and management teams are incentivized to deliver for shareholders.

  • Leadership: Oskar’s hands-on leadership style and visionary strategies that put Orion at the forefront.

  • Mastering Risk: How Orion proactively manages risk and prevents issues from escalating.

  • The Future of Metals: Oskar’s view on the global trends shaping the mining industry and how Orion is taking advantage of it.

This interview offers a truly unique perspective. Don’t miss it.

Listen to the episode on Apple PodcastsSpotifyYouTube, SoundCloud, or on your favourite podcast platform.

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The transcript of this episode is included below.

Note: Transcripts may contain a few typos.

Transcript:

[00:00:00] Jamie: All right, Oscar, welcome to the podcast today.

[00:00:02] Oskar: Thank you for taking the time out to meet with me.

[00:00:06] Jamie: So, this is your first podcast.

[00:00:11] Oskar: It is.

[00:00:12] Jamie: And I appreciate you taking the time today. Obviously, I’ve had the chance over the last year or so to get to meet you, some of the members of your team. And I’ve been really fascinated by what you’ve built here at Orion. And I think for listeners at home now who might not be familiar with Orion, what it is, what you do. I’d love to just give a brief overview of where we are today. Cause you know, we’re sitting right across from Bryant Park in New York and Manhattan. We’re on the 25th floor of a beautiful office tower. You guys, as I understand, just celebrated your 10-year anniversary at Orion. And can you give us the 30,000 foot of like what Orion is today and what you guys do?

[00:01:10] Oskar: Sure, glad to. Orion seeks to be across various products investable in respect to any and all areas of the mining vertical So, should you like to look at mining from the lens of technology? We have a venture capital business. Should you like to look at mining purely in the form of public equities? We have a public equities product. Should you like to invest in the construction end of mining as the building of mines? We have a construction financing product, and so on, so on. So, we have a number of different investable products that all work jointly to try and give insight to people in the, across the entire mining vertical, from the ore production all the way through to futures hedging. That’s, that’s the goal of the organization, and hopefully we have, after 10 years now, achieved that successfully.

[00:02:06] Jamie: And who are your, your clients? What kind of investors do you service, your LPs?

[00:02:11] Oskar: So. Our, our biggest source of capital are U. S. pension plans and sovereign wealth funds. So, our investor base is actually more on the large ticket, small number side of things rather than, say, a lot of small endowments, foundations, those kinds of things. So, we have a very concentrated, large investor base.

[00:02:37] Jamie: Okay, so you can see I have a lot of notes here in front of me. I do want to get into everything you’re doing in detail today, but I’d like to actually sort of take a step back first. And so, you’re ten years in now. I’m in this sort of beautiful, gleaming office today. If you were to take us back sort of ten years from now, when Orion started, can you kind of lay the, can you paint the picture for what I would be looking at then and what you were What you were thinking at that time?

[00:03:05] Oskar: Sure. Well, 10 years ago which was actually last September, we spun out of another firm called Red Kite. And Red Kite was in its heyday I believe the largest metals trading hedge fund in the world. And at Red Kite, I was one of the three founding partners there. We decided that it would be very useful for our physical trading business to actually finance mines as a way to secure supply. And so, we built a mine finance product alongside the trading business. And then when the mine finance business sort of matured a little bit we decided as a group that it actually behooved us to separate the business and so we did. And Orion was born out of that, out of that separation.

[00:03:51] Jamie: And were you doing, you know, physical trading similar to like a Glencore or a Trafigura?

[00:03:56] Oskar: Yes, yes.

[00:03:57] Jamie: Not just derivatives?

[00:03:57] Oskar: Absolutely. Yes, correct. So, absolutely. We did in the day at Red Kite, we did a lot of physical trading, and we continue that tradition here at Orion. Our physical offtake business is a central core of what we do. It informs us on the mine supply side. It’s a really good real time catalyst to understand if there’s anything going wrong at the mine because it shows up very quickly in production. If there’s missteps at the line, it also helps us understand the flow of physical business. It acts as a natural long position, so it’s useful for hedging as well, for the commodities futures product. So, it is actually a core activity of the business. It’s something that is really central to us since we started the business.

[00:04:47] Jamie: Do you guys, and maybe at Red Kite it’s different than here at Orion, but do you actually facilitate physical transport of goods? Whether on a train or a ship or what have you?

[00:04:57] Oskar: Absolutely. So, we take sight of cargo, physical material at a port or at a mine gate. We transship it, we insure it, we deliver to customers, we pay to merge when we have to at port. Yeah. And we actually consign to rail cars and move material around the world.

[00:05:19] Jamie: So, have you ever read the book The World for Sale?

[00:05:22] Oskar: Yes.

[00:05:22] Jamie: Yeah. And so, in that book they talk about, and for those listening at home, this is a book by two great Bloomberg journalists that really dive into the history of the commodities trading businesses. And Glencore featured heavily in there. And they talk about how Glassenberg sort of saw the writing on the wall that the margins were kind of getting squeezed out of trading and that he wanted, and he needed to own the actual assets. And it sounds like you guys had a similar realization at Red Kite. Is that fair to say that?

[00:05:56] Oskar: Yeah, it’s fair to say. Yeah. I mean, we realize that the best way to control the margin of the physical trade is to actually own the supply, right? And you don’t need to necessarily own the mine to own the supply. What you really need to do is own a long term off take contract. Now, obviously, if you’re negotiating with yourself because you own the mine, that contract is a lot easier to sort out. But it’s not necessary. And the most successful trading houses have a mix of those things. They own assets that they control and that they run their off takes off of. In some cases, they actually provide the service to a third party and it’s the mixing and matching of those things that creates a great trading book.

[00:06:39] Jamie: Do you have much of a view on there’s like the traders that became miners, I think probably the Glencore is the best example of that.

[00:06:46] Oskar: Yeah, and the traffic rulers.

[00:06:47] Jamie: Yeah. And then there’s the miners that I presume more quietly built out their own trading houses like the BHPs or something like that. Do you have a view of whether it’s easier to go one way or the other?

[00:07:00] Oskar: It’s easier to be a trader and become a miner than be a miner and become a trader. They’re very different skill sets. Right. When you are a trader physical and otherwise, you are an LME person, and you go to the LME dinner. Yeah. If you are a mining guy, then you go to PAC, right?

[00:07:17] Jamie: CIM. Yeah. And CIM.

[00:07:19] Oskar: And you go to those meetings. You don’t see very many traders at the one meeting. You don’t see any mines at the other meeting. So, there are separate worlds and there are fewer than a handful of successful stories about merging those two skills.

[00:07:33] Jamie: Yeah. So, when you wake up in the morning, look at yourself in the mirror. Do you see a trader or a miner at heart?

[00:07:41] Oskar: I see a trader. I don’t like looking in the mirror in the morning. It’s not a pretty thing, but…

[00:07:46] Jamie: So, you’re at Red Kite. Red Kite, as I understand it, still exists.

[00:07:50] Oskar: I believe so, yeah.

[00:07:52] Jamie: You left and started Orion, as I understand it, focused on the mine finance business.

[00:07:58] Oskar: Correct.

[00:07:59] Jamie: So, most of the people listening to this podcast are investors in mining. But very different than the way you would invest in mine. They’re primarily retail investors. They buy equities mostly in the public markets. Can you give us the overview of what mine finance is and what stage you’re really looking at there?

[00:08:18] Oskar: Okay, so, development of a mine, which is really a development of a project. It’s typically not called a mine until it actually produces, right? Until then, it’s really a project. A project development has two general phases. One, exploration, and the second, execution. So, they’re differentiated by what the primary activity is. So, exploration is really, as you would expect, finding the rock, finding the ore body, determining what its size is, and getting an idea of, how economically viable it is, right? Execution is, I have a viable ore body, I have a good set of economics, now I actually have to construct the mine. So that’s a building exercise. And usually, roughly said that the amount of money spent to get to a production asset is about 20 percent exploration and about 80 percent construction. So, exploration is riskier because you may find nothing after spending a bunch of money. But execution is much bigger dollar signs, but much, generally much lower risk. We are firmly in the execution camp. We are not really finance, financiers of exploration. There’s a whole, as you can imagine, there’s a whole junior mining market out there. You know, Canadian based largely, but also Australia and other countries, and they fund exploration. Once you get to us and you need the really big checks written, then you have a mine plan, you have a budget, you have permits, and then you’re ready to actually pour cement, right? And that’s where our money comes in. And what we try to do is we try to make sure that the entirety of, in our view, the scope of work and the amount of money necessary to achieve that scope of work has to be spoken for, right? You don’t want to build 90 percent of a mine because then you have nothing, but lit cash on fire, right? So, you have to know that you have all the money necessary in your estimation or in Orion’s estimation to finish a mine. And that’s what we do. And so, what we’re essentially underwriting there is a project that’s unfinanced. It trades roughly in the market at about a 4 times NAV, whereas a cash flowing growth asset trades at north of one times NAV.

[00:10:34] Jamie: And so, you’re clipping that margin.

[00:10:36] Oskar: And you’re clipping that margin, right? One divided by 4 is a two and a half multiple, right? So that, that’s essentially what we’re underwriting.

[00:10:43] Jamie: And for people at home not familiar with NAV or NAV, that stands for Net Asset Value, which is a calculation of the underlying value of the assets, typically.

[00:10:52] Oskar: Correct.

[00:10:52] Jamie: Yep. So, okay, so, is it safe to say, you know, a lot of the, especially the junior mining speculators they’re looking to knock it out of the park, right? They’re looking for those 10x returns, you know, they’re willing to, to eat some losses along the way to search for that 10x. You’re looking at a much more structured product and deployment of capital.

[00:11:14] Oskar: Exactly. Early-stage exploration is, you know, venture capital for rocks, essentially. And that is, I’m going to write a couple of zeros, I’m going to maybe cover my face once or twice, and then hopefully the rest of the time I’ve got a 3x or 5-dagger or however you want to call it. And that’s a very VC model in a way. And that works for various people that like that kind of risk. To our thinking, that’s not really very institutional in nature. And we’re looking for, um, investors, and investors are looking for us to hit singles, doubles, triples, not grand slams, right?

[00:11:49] Jamie: So, when you were sort of devising this, and what you’re saying now is, it sounds pretty obvious, and you know, this exists in infrastructure, and basically every other industry in the world. But, and I’m not an expert on this, but when I look at all the other mining PE funds, private equity funds in the world, first of all, there aren’t that many that are around for the long run and there aren’t as many, I think, that sort of take the approach that you’re taking. There’s a lot more equity focused and a lot less sort of structured finance. So, did you come at that, like, did you understand the needs of the clients you wish to service or was this just sort of how you viewed the industry, and you were scratching your own itch there?

[00:12:39] Oskar: I like the scratching your own itch analogy. I think that’s kind of more appropriate actually. It doesn’t do anyone a favor to put something together that an investor likes, that’s a great story, but isn’t fit for purpose, right? So, what a lot of people have done over time is they’ve invested in PE structures that mimic what you’d call a retail investor approach, which is early-stage equity. Which leads you to a too concentrated position. No flexibility in your capital structure and passive exits, right? Yeah. To exit your equity position, you need somebody else to buy your equity position, which means you can’t really drive that success, because unless you have all the money together to actually build a mine, you don’t have any alternative path. You either, right, if you have, if you’re looking at this from a perspective of, I’ve just funded this exploration success story, either I build a mine and go public and exit that way, or I sell this discovery to, to a third party.

[00:13:45] Jamie: Yeah.

[00:13:46] Oskar: And if you can’t sell it, and you don’t have the money to build it, then the person that you’re selling it to knows you don’t have the money to build it. You have no leverage in that transaction.

[00:13:58] Jamie: And you see this a lot, these PE funds that get trapped, right? Exactly. It’s like they own all of it, or a large, or most of it. They list it. They raise some other money. They still own the money. 40 to 60 percent of this thing. There’s no way they can sell that stock in the open market. No one else wants to finance it if they won’t finance it.

[00:14:15] Oskar: Exactly.

[00:14:15] Jamie: And then they’re trapped.

[00:14:16] Oskar: They’re trapped. Exactly, exactly right. And that is been the bane of existence for many a person in this space because they know that there’s this overhang of paper that wants to be sold. And they’re not going to get in front of that because that sales process will crush the price, right? And if they know that you can’t sell it and then there’s no financing in place because you have no more money to follow your money to actually build it, you end up in this sort of you know, sort of impasse.

[00:14:47] Jamie: Yeah. So how do you guys do things differently? How do you avoid that trap?

[00:14:53] Oskar: Well, first of all, the best way to avoid that trap is not to walk down that road where the trap is, right? And that is, right? And the way to do that is not to get involved in those early stage, more middle stage exploration plays. There’s a famous sort of curve with many different names, the most common is the Lassonde Curve, right? And that’s very low value through exploration and all the hype gets told, the share price runs up, then the people realize, oh no, oh no. There’s nobody going to buy this, but we now need, you know, a billion dollars to build the asset. Where is that coming from? The share price comes back down. Construction finances raise. This finally happens. Then the share price runs up, and then you have a publicly traded cash flowing entity, right? What we want to do is we want to get in at that trough in the Lassonde Curve and we want to get out on the first day of commercial production.

[00:15:50] Jamie: And you’re using, in these scenarios, a combination of debt, a combination of royalties and off takes, a combination of equity. Is that fair to say?

[00:15:59] Oskar: Yeah, so, what we talked about at the beginning was that there’s no point in financing the first dollar of a mine construction if you don’t have the money to finance the completion of the mine construction, right? Ninety percent of a mine is just a big hole in the ground, right? So, you have to speak for all the money, and you certainly don’t want to take that check and write one big equity check for it, right? You certainly want leverage, and you certainly want to be, you know, clever in structuring how, you know, that mine package, mine financing package is built. And for that you need to have a lot of different options in your house to do that. Because every mine is different, every cash flow profile is different. You have to bespoke your package to the needs of the client, right? And that’s not possible if you don’t have the ability to do any and all of those different kinds of structural financial tools in your tool belt. And Orion is one of the few organizations that has enough experience, enough expertise. In all of these kinds of structuring options to really tailor properly the package to the, to the needs of the mine. Additionally, what a lot of people forget to do or do poorly, that we’ve, you know, sometimes through, you know, hard yards ourselves, have to be said, learned about, is how to milestone properly, right? So, if, if you have a billion dollars that you need to build a mine, the worst thing you can do is go to the mine manager and say here’s a billion dollars call me in three years and let me know I went right, so…

[00:17:30] Jamie: You have some nice dinners.

[00:17:32] Oskar: Yeah, that’s right. Yeah. Oh, that’s Ferrari. It’s new on the lot. How’s that happen? So, what we do is we don’t finance all the money up front. We have different stages different requirements both financial budgetary, personnel and operational readiness You to draw money from us. So, you have to meet every milestone for the next ticket to arrive.

[00:17:57] Jamie: So, you accomplish X, that unlocks Y amount of capital.

[00:18:00] Oskar: Exactly right.

[00:18:00] Jamie: So, I have a question here for later, I’m going to pull it forward. So, agree or disagree? So, mining as an industry massively overcompensates its managers and massively underperforms.

[00:18:14] Oskar: I don’t believe it massively overcompensates its managers. I believe that compensation schemes could be better tailored towards success. But if you compare mining executives to oil and gas executives, for example, they’re certainly not overpaid, right? But the incentive alignment could be improved. Only about 20 percent of mining projects get built on time and on budget. On time is within six months of original timeline, and on budget is within 15 percent of original budget. So, it’s an industry that is woefully inadequate as far as returning capital properly to its shareholders, because overruns lead to dilution, lead to delays, lead to worsening conditions for mining companies and lead to long term on an industry wide basis lead to people exiting their interest in investing in the space, right? And there’s many a paper been written about value destruction in mining and don’t need to belabor that. What we have to do is we have to find a way to do that more cleverly and that path exists.

[00:19:26] Jamie: And it’s the milestones part of that, right?

[00:19:27] Oskar: Milestones are certainly part of that proper structuring of covenants for, for debt facilities is part of that, balancing the debt facilities with structures around production linked financing so that the part of the financing package is linked to production so that the company feels more comfortable about its relative leverage is important. The ability to intervene rapidly, which is important. Mining companies that have things go wrong quite often don’t have the budget or the wherewithal to deal with the problem when it’s still minor and the problem escalates. And as you know, in any of these sort of construction projects, one small thing near a bottleneck or a critical path can have a cascade effect across the entire project. And by the time you get to figure out what the original problem was, it’s morphed into something much bigger, right? There, Orion is very happy to be hands on with folks. What we do quite often is understand there’s a problem, and because we’ve seen that problem in another asset that we’ve investigated or funded, we know how to solve the problem and who the person is that can solve that problem. So, nipping stuff in the butt is another big advantage that we have. Another big lesson that we learned over time to, to have open dialogue about what is going poorly and sorting it out quickly.

[00:20:53] Jamie: You know, when you get got into this career, did you start with like, you’re we’re in New York, not exactly a mining hub. I think you grew up here, if I understand.

[00:21:03] Oskar: I did, yeah.

[00:21:05] Jamie: Were you fascinated with mining or were you fascinated with finance early on?

[00:21:08] Oskar: I was actually fascinated with finance and fascinated with finance as a sort of an oxymoron. I mean, I don’t know how. You know, finance isn’t really that fascinating as a career, but it’s where I started, right? And I really got into mining quite a while ago almost by accident. I was, you know, busy being a general corporate banker, but I got sent out to Central Asia very early in my career.

[00:21:38] Jamie: Where specifically?

[00:21:39] Oskar: I was sent out to Kazakhstan, I was sent out to Azerbaijan and I worked on a lot of the sort of post-Soviet mining industry and oil and gas industry sort of restructuring.

[00:21:49] Jamie: So, this is taking these sorts of state run organizations and listing them on a

[00:21:54] Oskar: Exactly. Listing them, selling them, running privatization campaigns for, for people’s equity in these, in these businesses. So yeah, I did, I did a lot of that at Credit Suisse.

[00:22:06] Jamie: Ah, yeah. I mean, have you, I assume you may have read Bill Browder’s book and sort of his early career in, in doing something similar.

[00:22:14] Oskar: Yeah, he was more oil and gas and very much Russia focused, and I guess I was lucky enough not to be Russia focused. And more mining than oil and gas. But yeah, essentially this was the wild east back in the day and figuring out stuff that never had to be figured out before. And it’s a really steep learning curve but fun too.

[00:22:38] Jamie: And so, did you kind of fall in love with the sector and see the opportunity there?

[00:22:42] Oskar: I did actually, yeah, I kind of fell in love with it. I’d say mining for most of the people in mining is kind of a love hate relationship. You have to, you have to kind of love it, but it drives you crazy too. At times, right. Yeah. But it’s, you know, it’s kept me busy. And mostly out of trouble.

[00:22:58] Jamie: So, if we come to today, you guys have been doing this for ten years now, it’s a very different world today. Where do you see the opportunities in mining today? Where is Orion and yourself focused on in the future?

[00:23:16] Oskar: Well, a lot has been said in the press and a lot of other sort of public announcements have been made about the importance of decarbonizing the economy and sort of you know, removing fossil fuels from the energy systems and replacing them with, you know, renewable energy. A lot less has been said, although, you know, certainly some, something’s been said about how important mining is to that conversion, right? The amount of lithium, the amount of graphite, the amount of copper necessary for a successful transition is finally starting to be understood by people. And the need for upstream supply for downstream assets be they geothermal wellfields, solar panels wind farms is finally sort of being understood by the OEMs, by general industry, by the government. You know, belatedly, the U. S. government is, it’s sort of cottoned on to the fact that they need to do something about securing critical materials to the U. S. The EU has also initiated a program as well about a year ago now to try and secure supply. So that is obviously a very big thematic that’s, that’s a booster of demand. I think the other things that are probably a little bit less well understood, that are also big sources of incremental demand for metals are the use of a great deal of metal in military situation. So regional conflicts that we’re going through now are vast consumers of metal, right? So that has to be replaced as well. That’s another source. As of about 5 or 6 years ago now, the world has finally moved to being predominantly urban. So more than 50 percent of the world’s population lives in the cities. Cities are much bigger consumers of metals than the countryside is, right? You’re moving essentially from wood construction to cement and steel construction. So that’s another big source of demand. And then lastly, incremental sources of new energy requirement. Not just for transitions, but also the amount of data centers and AI data centers that are cropping up now that need energy and need infrastructure for that energy. That’s all incremental sources of demand. And now, the important word to understand there is that they’re incremental. Right? There’s still all the underlying historical needs for metals that always existed. Like you still need copper for tubing. Right? You still need all that kind of stuff. This is all new sources of demand.

[00:25:54] Jamie: Well, the stat I read from one of the banks, one of the research groups, is that it’s something like in the next 25 years there needs to be more copper mines than all of human history up to this date or something like that.

[00:26:08] Oskar: That’s a quote that a lot of people have made. I think most recently the CEO of Rio Tinto said that at a conference. And it’s true. We do need to mine more copper in the next 25 years if we’re going to meet our urbanization demographic requirements, we’re going to meet military requirements, we’re going to need to meet energy transition requirements data center, all that stuff means we need to produce more copper. Closer to 50 million pounds of copper versus about 25 million today.

[00:26:40] Jamie: And so, we’re seeing like today, the majors reacting to this in a big way, right? We like Anglo’s now in play. BHP put a bit in for them. Glencore is kind of going around that too. So, you can see the biggest mining companies in the world are making big steps to lock down supply. But they’re really only locking down existing supply, right?

[00:27:04] Oskar: Exactly. They’re changing the ownership of supply, not adding to it.

[00:27:07] Jamie: Even, I think, was it last week, we saw the UAE Sovereign Wealth Fund, they bought a big chunk of KCM, Vedanta’s Zambian copper mine, a billion dollars, I think, for 50 percent of it. So, that’s great, and it’s good to see money flowing into, sort of, consolidation and bringing these sorts of assets offline. We still need more mines, right? We need a lot more copper mines.

[00:27:33] Oskar: We need to do three things better. One, we need to incrementally improve recycling.

[00:27:39] Jamie: Okay.

[00:27:40] Oskar: Because that’s copper breathing air. That’s, is it, is it the highest, best use of copper? Or can you recycle that into, into A better use. That’s one thing. Second, you need to maximize out substitution or thrifting. Right? So, you need to say, do I really need zinc for this? Do I really need copper for this? Is there a way to use less to get the same result? Or substitute it out with something that’s not as constrained physically as this metal is, for example. Right. So, in battery chemistry, is there a way to run a battery chemistry without cobalt? If you can figure that out, and people are talking about how to do that. Then all of a sudden cobalt becomes less of a tight market, right, because you don’t need as much for what you’re using. And then the last thing, the last one is obviously primary new supply, which is the building of mines. You need all three of those working together to have any hope of meeting these demand size targets that people are talking about.

[00:28:41] Jamie: Okay. So, with respect to the primary supply, this is going to be kind of a hard question to answer, I think.

[00:28:50] Oskar: Oh, good.

[00:28:51] Jamie: What has to happen to incentivize miners, governments, the key players here, to actually go out and make that happen? To develop new mines, to explore aggressively for new mines? Is it simply metal prices need to rise to incentivize that? Is it regulations need to change? I mean, I don’t know. Certainly, you know, America and Canada and the Western world is a little, I think a little slow to the game. You know, the Chinese have been picking up critical assets in Africa, now aggressively in Latin America for years now. What has to happen for, let’s call it, North America and Western Europe to catch up there? Or can they? I think I asked you two different questions.

[00:29:38] Oskar: Yeah, it’s okay. A complex compound question. Okay. No. Suffice it to say that the West needs to catch up. It’s not a what if or do we need to or can we or should we. It’s almost an existential question for the West at this point. If they don’t get this together, they’re looking at a long-term slowdown and decay of the economy. Their way of life. You need to do this, right? It’s a nice to have type outcome for them. Not everybody realizes that. Not everybody buys into that. Not everybody is as fully convinced as I might be that that’s true, right? So, the first thing that needs to happen is education, right? And that’s where something like a podcast comes in because these people that have various sort of agendas and have various you know, issues that they have to contend with.

[00:30:35] Jamie: And you hear that, Biden, are you listening right now?

[00:30:39] Oskar: I actually think, I think, I think, I think actually Joe is actually on board with this. I think the IRA is a really powerful piece of legislation in that direction. Right. I also, for what it’s worth, I think Donald Trump kind of sees this as one of the few bipartisan things he can actually agree with the Democrats on, so I think that that’s super helpful. But you’re right, I mean the Chinese Belt and Road Initiative has given them a pretty massive head start on this and we need to catch up, but if anybody can, it’ll be the sort of, the Western powers, pretty, you know, innovative, pretty fast at catching up. What has to happen is you need an incentive price of production. Where you asked about incentive prices. So, you need that to happen, right? Otherwise, there’s no economic benefit to the West and to the people that provide private capital to actually deploy it in this space, right? So, you know, you can, you can, you have a dollar, you can spend it on a lot of different ways to convince somebody to spend it on building a mine. Means that the mine has to return in something economic relative to its risk Versus other projects, right? And you know, is that a solar Panel is that a wind farm or is it a mine, right? The first initiative has always been for people to go downstream and fund green projects. But the returns there are, for infrastructure returns, are single digit returns now, right? The really interesting returns are now upstream, right? That’s starting to be recognized and money is moving in that direction. But you need incentive price of production. And you need certainty, and that certainty is really a question of permitting at this point, right? The last thing you want to do is spend all this money on a mine project, you know, we’re talking about hundreds of millions of dollars in some cases, only to be told that the mine is a no go because some permitting issue came up that you knew about, that other people knew about, but they just ignored, and they didn’t want to deal with it. And then they say no. And then you’re sitting there with all this money spent and nothing to show for it. That needs to change. You need certainty. You can certainly say no to a mine. You can say, I don’t like this mine. I don’t think this is in the right area. It shouldn’t be built. But, to say it’s okay and then wait till a lot of money has been spent and then say no is a problem.

[00:33:01] Jamie: So, in the lead up to this conversation, I’ve been trying to think about the problem and the solution here. I have a pet theory, but I want your feedback. So, the, you know, the problem with competing against, say, the Chinese, is You know, often they’re state sponsored. They don’t really need to make money on the acquisitions of the mines. From what I can see, you know, in the case of things like lithium, they’re just securing the feed for their downstream industries, right? And all the money is made in making the batteries or the solar panels or whatever, and they’re able to outbid almost everybody else in the world for assets. How does Because North America, you know, the Canadian, U. S., Australian mining industries compete with that when companies, private equity firms, et cetera, they actually need to make money on these investments? They have shareholders they answer to. So, I have two theories here. One is that there will need to be some form of public private partnership where the government is providing capital in order to secure assets for, for some form of national interest. Or two, that the only people that can maybe afford to compete here are the big tech companies whose cost of capital are so low who trade at such high multiples that, you know, the Teslas or the Microsofts or what have you, they’re able to actually go down and lock, lock down their feed of whatever minerals that is critical to them and not be concerned to the same degree about making money as obviously a mining company would be. What do you think?

[00:34:48] Oskar: I think you’ve identified certainly a key problem, right? Which is that the political situation in China and the SOEs that work for the Chinese state aren’t. always rational economic actors, right? They, they have a geopolitical element to them and they, they think very long term and they, they may be willing to lose money up front on something just to secure supply and to ensure the ability to bottleneck other geopolitical actors, right? And you’ve seen that in Rare Earths. You’ve seen that in a couple other situations recently. So, you’re right. That, that, you know, that’s not a level playing field from the perspective of the West, right? I’m not as deeply concerned by that, and I’ll tell you why. Making decisions on a non-rational basis, a non-economically rational basis will tend to cause problems for you in the long term too, right? So, you’ve seen a number of investments that the Chinese made under their Belt and Road Initiative in Africa go sideways really badly, right? So, there’s only so long that the, that the any kind of economy, even the Chinese economy, can tolerate abject negative returns, right? And you’ve seen that in a number of projects where they’ve overbid where they’ve constructed ports and railway systems in different countries and those railways are empty. You’ve seen, even in China itself, you’ve seen the Chinese build airports where there’s no, there’s no landing slots, right, for airplanes. So yes, you can be economically irrational, but eventually that’s going to end up costing you. And I think that is something that the West can avoid making as a mistake, that may be a mistake over time. That doesn’t solve your problem immediately, obviously. This is sort of more of a longer-term evolution of thinking. But nearby, you’re right. There’s got to be an ability for the West to compete on an economically rational basis against a, a player that’s not necessarily that and the way I think that works really ultimately is that you have a Western balanced price mechanism that, that essentially guarantees at least for some portion of the minds output, a floor price and then a floor price It looks like a price that provides a certain positive level of return to the investor and the mine and doesn’t allow a non-economic actor like the Chinese government to underbid the prices, right? Because that’s, that’s something else that happens, right, is you go in and you write yourself an economic case for an investment and then the Chinese come in and they underbid the price that you think you’re going to get for your output and then, you end up having to close your operation down, right? So interesting example today in cobalt, right? The Chinese have gone from producing China has always gone from producing 10,000 I think it’s tons maybe of cobalt to producing 100,000, right? And the whole market in the world for cobalt every year is 150,000 tons.

[00:38:01] Jamie: Okay, so they’ve just flooded the market.

[00:38:03] Oskar: They’ve just flooded the market, destroyed any ability in the West for anybody to make any money on cobalt. Everybody shuts and the West shuts down their cobalt production.

[00:38:10] Jamie: Then the Chinese can buy up all those mines if they want to as well.

[00:38:13] Oskar: Exactly right. So as long as you knew that there was going to be a guarantee from either an OEM, a tech company, or the government, or somebody that says we’re going to guarantee 40 percent of your productions at this price and with that you just about survive, then the Chinese can’t play that game with you, right? They can’t just, you know, take you out.

[00:38:33] Jamie: So, do you envision that happening kind of like on us or maybe North American based assets, or do you envision that happening for US companies on global assets that they’re involved? How, how does that might be?

[00:38:52] Oskar: I don’t know your realm? No, no. I just, I don’t, I, I don’t know how that happens. I’m just hypothesizing that that’s a path that, that people have talked about taking. To, you know, secure supply, because you don’t want to end up being completely dependent on the Chinese for sources of materials.

[00:39:11] Jamie: There’s a lot of discussion, obviously, today in terms of sort of on-shoring to America, right?

[00:39:19] Oskar: Yeah, or friend-shoring.

[00:39:21] Jamie: Yeah, probably chip manufacturing being the most prescient. But I think that there is a time when the actual deposits of onshoring for, you know, be it lithium or nickel or cobalt or what have you, there is going to be a focus on securing those in, in friendly countries in North America again. But I think, you know, to your point earlier, that means real, in a lot of places, overhauling of regulations, right? Or at least, or at least clarifying the regulatory environment. Do you think that happens?

[00:39:59] Oskar: I do believe that happens. I really just hope it’s not some kind of traumatic event.

[00:40:05] Jamie: Yeah.

[00:40:05] Oskar: That forces that to happen, right? You know, you want to, you want to take care of it before, you want to take care of those kind of problems before they become acute, right? And that’s a question of political will. And, and sometimes it takes, it takes something traumatic you know for, for the people to, to do that. I hope not, but, but who knows?

[00:40:27] Jamie: I think it probably will. You know, I think about even just Canada, right? Like it took a global pandemic for us to realize maybe we should be able to produce some vaccines within our own country. I hope you’re right. I have a hard time, seeing the politicians prioritizing that, or even being able to prioritize it if they wanted to without kind of everyday people feeling the pain of some sort of shortage of something that’s critical.

[00:40:54] Oskar: Yeah, but politicians hate when people feel pain.

[00:40:57] Jamie: Which is why they’ll try to, they’ll have the ability to solve it then.

[00:41:01] Oskar: But yeah, but this question is, if you could solve it with a band aid now, or general surgery a year from now, would you rather Fix it with a band aid. I would have thought so. But you’re right. Sometimes it takes a wound for it to work.

[00:41:15] Jamie: I would rather fix it with a band aid. I don’t know if, you know, in every country politicians even realize that band aid is necessary. So, I guess we’ll see.

[00:41:25] Oskar: We’ll see. I mean, the other thing to remember, right, is it isn’t just about permitting, right? It’s and or government acquiescence to allowing for a rebuilt mining industry in North America, right? It’s also about having the skill set to do that, right? The U. S. has had a, had a real issue with a mining workforce and a mine engineering workforce that’s aging rapidly and with very little in the form of next generation expertise being homegrown here, right? In order for the U. S. to actually build out a mining business again, it needs metallurgists, needs geologists, needs process engineering. All those guys that do that now or have done that for the in the U. S. for years are all in their late 50s early 60s at this point and the people beyond behind them are all chemical engineers or well electrical engineers are all computer coding you know they’re not learning how to do stuff that’s necessary and to make it even worse a lot of the more advanced kit that is necessary for mining these some of the equipment It’s made in China now. It’s not made in the United States anymore, right? I mean, okay, clearly, we still have Caterpillar, and we have, you know, some of the yellow kit that is necessary is made in the United States, but a lot of more specialized mining equipment, we exported all that production to China now.

[00:43:05] Jamie: Ball mills, et cetera, yeah.

[00:43:06] Oskar: Yeah, it’s not made here anymore.

[00:43:07] Jamie: I have that in my notes, actually. You know, what do you, how is Orion preparing for a talent gap? Because, you know, you’ve, you know, got a lot of money to deploy and, and support companies. And I look at myself, you know, I’m 38, I’m a mining engineer. Most people I know doing that job are, are in their 60s now. You know, there’s not a lot of people between me and the 60-year-old.

[00:43:33] Oskar: So that means you just get promoted faster.

[00:43:37] Jamie: Heaven forbid that mining company. But now how do you think about that? Right? Because you guys have been around 10 years. I assume you want to be around for a lot more, you know, how do you look for talent? Both in terms of who’s working for Orion and then who’s working at your portfolio company.

[00:43:56] Oskar: It’s a real challenge for us I mean, you know. Our technical team is based out in Colorado, right? You know, near the Colorado School of Mines. But most of the guys in our tech team are with one or two exceptions. They’re all in their late 50s, early 60s, right? And the people that we’re finding that have those skill sets are not Americans. They’re, in some cases, Canadians, and in some cases, Australians. But in a lot of cases, they’re Chileans, they’re Peruvian. You know, they’re not, and, you know, I don’t know. In inducing them to come, to move to, to the United States to do something is a challenge too. It’s a language challenge. It’s an education challenge. It’s an expense challenge. Right. It’s a visa challenge for, you know, certain you know as well. Yeah. So, we’re having to go to where they are as opposed to them coming to where we are in a lot of cases.

[00:44:48] Jamie: Does that mean, so as, so you have offices in the United States, Australia, London. Chile? Do I have that one right?

[00:44:57] Oskar: No, but we have Chilean expats working for us in those offices, for example.

[00:45:03] Jamie: Yeah, is that how you approach it? You set up an office, maybe set up a satellite office in the region?

[00:45:08] Oskar: Yeah, we are thinking of setting up a satellite office in the region. And in somewhere in the Middle East to get some of the talent there because there’s a quite a bit of talent over there We don’t know if we’re gonna do that, but we’re thinking about it But it’s you know, if you’re if you want to build a brand new mine somewhere in you know, Michigan Getting the right people there to build the mine effectively is not easy, right? It’s really challenging. And that’s another, I mean, that’s another problem that takes time to solve. You can’t just throw money at that.

[00:45:42] Jamie: If you think of the young engineers, right, they can go work at a mining company and make 150, 000 a year, or they can go become computer engineers and make 400, 000 a year in Silicon Valley.

[00:45:51] Oskar: That’s right. You can go to the office, have your dry cleaning done for you. Macchiato sent to your desk, or you can sit out in a base camp in the middle of Manitoba.

[00:46:01] Jamie: Yeah, so the case is that those jobs are not really being compensated properly to attract the talent. And for that you need higher metal prices.

[00:46:10] Oskar: There you go.

[00:46:13] Jamie: How do you guys, when you’re investing, think about teams versus assets? Because, you know, the best mining asset in the world is basically worthless without the right team to operate it and to extract it.

[00:46:29] Oskar: Yeah, but vice versa is also true. A really good mining team with an asset that shouldn’t be built is also a waste of time, right?

[00:46:37] Jamie: So how do these sort of sit in your evaluation process? Do they hold equal weight? How do you view that?

[00:46:43] Oskar: Well, our view is actually, interestingly enough, a little bit of a combination, right? We tend to believe that really good assets attract really good mining teams. Right, one of the best ways to know if an asset’s worth looking at is to look at the management team that is running that asset. Because if they are good at what they do, they will have invested, investigated that asset itself, and decided whether or not it’s worth their time to be there. I mean, very few management teams want to take on a challenging asset if they don’t have to.

[00:47:17] Jamie: They have better options.

[00:47:17] Oskar: They have better options, right? So, a good management team and a good asset tend to sort of correlate with each other. And so, we think ultimately, it’s almost always easier to change some of the management team instead of changing the asset. Because the asset is what mother nature gave you. You have to deal with it as it comes. But by and large, and this is the benefit of being in this business for so long, is we kind of know everybody in the space. We know who’s good and who’s, you know, who’s the A team, who’s the B team. And so, A team assets and A team membership tends to correlate. And so, for us, the home run is, you know, not having to choose between the two. Let’s put it that way.

[00:47:59] Jamie: Are most of your investments made with sort of the very well-known entities? In the sector, you know, I know like the Robert Friedlands of the world, for example, or do you have a lot of sort of lesser-known teams that you guys have found to be very good and don’t maybe necessarily have quite the public image as some of, some of the better-known entrepreneurs in the space?

[00:48:23] Oskar: I think that the winning combination is a little bit of both of those, right? You want your sort of, you know, pedigree names, your sort of, you know, your Frank Giustra’s and, and Regents and, and Friedlands of the, of the world. But you also have to understand that those, those names attract decent valuations, right? And so, you’re going to necessarily have to work that much harder to return something that, that you want to. The smaller, less known teams don’t attract those. those high-end valuations, but you have to, you’re taking a bit more risk that they can actually accomplish what, what you, what you think they should be able to accomplish.

[00:49:07] Jamie: So, I’m really glad you said this, because there’s this ethos, especially in junior mining, of investing in the, you know, the rockstar mining entrepreneurs, the Ross Beatys or the Robert Fruins, guys that have had these repeat successes. And a lot of the finance types, what they say to people is, you know, bet on Ross Beaty, he’s done this, or, or whomever.

[00:49:29] Oskar: Yeah.

[00:49:29] Jamie: The problem is I have seen is the reputation is priced in by the time most people get to invest right? It’s a premium because they’ve had XYZ.

[00:49:39] Oskar: And they deserve it right? It’s not it’s not like it’s not like the premium is just sort of magical It’s earned right and all those names you mentioned are all people that we have invested with and in our in our view deserve the recognition that they’ve earned right and we’re happy to be alongside them.

[00:49:56] Jamie: Yeah.

[00:49:57] Oskar: But the really big home runs are going to be outside of that sphere because the step in valuation the purchase price is Just more reasonable in some ways, right?

[00:50:10] Jamie: And that’s what I was going to say. All the big wins I’ve ever made are from relatively unknown groups of people. That are not, they have a lot of experience doing, typically I look for technical roles, because that’s where I’m maybe most apt to evaluate someone, and then they’ve stepped into the, okay, this is their first time with their own company, but they’ve worked heavily, and that’s where I’ve always had the best success.

[00:50:32] Oskar: Yeah, I mean, that’s absolutely right. The risk you’re taking is that sometimes the entrepreneurial exploration mindset that these folks have, that have found this really, you know, this jewel, jewelry box or this sort of gem of a mind somewhere, you know, after 20 years of running around finding different things, right, is, are they capable of transitioning themselves from the entrepreneurial exploration, watch every dime mentality to, okay, oh my God, I’ve got a billion dollar kitty now and I actually have to construct this mine and I have to hire a whole group of other people that I don’t necessarily know that well because I’ve just been running around with an exploration hat on. But now I actually have to manage the permitting cycle, I have to manage legal. I have to manage accounting. I have to hire a thousand people. I need to negotiate contracts and long lead item equipment. I have all this stuff to do, and there’s no way that guy that ran a small exploration company can do all that. He needs to, or she needs to rely on a whole new set of people. And can that person work within that structure effectively is a big transitional challenge for people like that.

[00:51:47] Jamie: There’s not many people that have done it successfully, right? I would make the case that most mining companies, as they go from exploration development to production, need to rotate out management teams to some degree, right? You need to bring in different leaders.

[00:52:02] Oskar: Management teams and boards, too.

[00:52:04] Jamie: And boards, okay.

[00:52:05] Oskar: Right, because sometimes what you can do is if you’re a manager that has a particularly good focus on one thing, you can rely on board members that have expertise in other areas, to help you out, right? So, what you don’t want is your board to be the, your buddies from, you know, from Canadian Finishing School or McGill or wherever, right? That you like, you know, that you play tiddlywinks with on the weekend and they’re all, you’re on board and they’re all making thirty, forty thousand dollars a year for four board meetings and having a good time. You know, that, that kind of board, Is just a, a disaster, right? So, you need to amend your board as well.

[00:52:46] Jamie: Now the average person. listening to this podcast is not ever going to own enough shares in a company to make a real, have a real voice in terms of changing up a board or influencing a management team. How do you guys approach that? Saying, okay, well, maybe it’s time for certain people to, to graduate out of this role and bring in a specialized mine builder or operator or financier of some sort.

[00:53:14] Oskar: Again, that goes back to what we talked about earlier, which is the milestone, right? So, one of the milestones that we typically develop inside a process is, how many people have you hired for these jobs? Have you, how many people have you canvassed for the job of mine manager? Who’s your procurement manager? Who have you brought on board for your corporate relations, IR, you know, how, how are these people, let’s see their CVs, let’s understand who you’ve picked and why you’ve picked them. That tells us a lot about you as a person, as a, as the CEO, is if you’ve picked your buddy that lives three houses down or if you’ve picked somebody that, you know, has a, has a pedigree. That tells us a little bit about how you want to run your business and that, that’s important, right? So, we, we try and make sure that we understand management teams and particularly management team plans. Right?

[00:54:09] Jamie: Do you assist with that? I mean, if someone says, look, you know, I haven’t done this before, what do you think? Thanks for the money. Now what do I do?

[00:54:17] Oskar: No, absolutely. So, we strongly prefer when people that want our money are also open to listening to us, right? And that goes back to what we said earlier about if there’s a problem, the worst thing you can do is try and hide that problem or downplay that problem because it won’t work. You can’t hide it from us for very long and we’ll take our own assessment as to how serious the problem is. So, if people are open with us, willing to talk to us, take our advice then it’s much more of a partnership, much more collaborative and that makes us much more comfortable. And good management teams should know where their blind spots are. They should know, I don’t, I’ve not done this before. I can use help here. And there’s nothing wrong with that. Doesn’t make you worse of a CEO or president to, to know what you know and what you don’t know. That just means that you, that you’re working, you know, for the best interests of everybody that’s a shareholder.

[00:55:16] Jamie: You know, it seems to me like a lot of mining companies, it’s a never-ending series of solving problems that come up, unexpected problems that come up. How do you guys look at sort of setbacks and investments you’ve made, because I’m sure you’ve had them at one time or another. How do you look at solving those problems?

[00:55:34] Oskar: Yeah, I mean, I think of what you say is fair that there’s problems in any ramp up or any construction project. I think. There’s two classes of problems, right? There’s unforeseeable problems, right? You know, a washout on a road and you’re trying to get equipment up to the mine. That’s an unforeseeable problem. Okay, maybe you should know that there’s a rainy season, but you know, maybe you’ve constructed the road, and you think it’s okay. That’s an unforeseeable problem. Then it’s a matter of how do you deal with that emergency, right? A foreseeable problem is a different, you Like, you should have known that this was going to be an issue, right? That, that is a concern, and that is a sort of review of how things happen and why things happen, right? The worst, though, is a foreseeable problem that becomes a recurring problem. And that’s when changes need to happen, right? So, you’ve made this mistake, you’ve done this incorrectly, and you knew you did it incorrectly and you learned from it, and then you did it again. That means there’s something systematically incorrect here and needs to change, right? And, you know, you’re allowed to, you’re allowed to learn from your mistakes, but you’re not allowed to repeat your mistakes. And that, if there’s a pattern of that happening in management, then something needs to change. Is that a complicated answer to your question?

[00:57:05] Jamie: I think that’s a clear answer to my question. Subtle, but clear. When, you know, you said something earlier that, about, you know, it’s hard to be passionate about finance, right? Finance is, you know, stereotypically a very boring career path, but, you know, potentially a lucrative one. But when I look at what you guys have done compared to your peer group in the mining industry, I see a lot of creativity there, right? You have a private equity firm, you have a, a long equities fund, you have a VC fund, you have a royalty fund, you have a trade finance division. I think there’s a bunch of other things that I’m not even aware of. How do you, you know, I can’t think of a comparable in the mining space that does this. How do you think, how do you think about creativity in this world and coming up with that? Like what, I think you’ve been not formulating this question well, but like I think you’ve done a very good job of being creative here. And where do you think that comes from in a traditionally very dry industry?

[00:58:21] Oskar: I think it comes from sort of a, a need to, for continuous improvement, right? So, as I said, we started out in a, in a different organization as a hedge fund, and then we realized that in order to improve our returns, we needed to have a physical business. And then we realized in order to improve on our physical business, we needed to have access to mine supply. Then we realized that one of the most interesting forms of, of financing are royalties and streams, and that the royalties and streaming businesses were pretty anodyne and pretty vanilla, and there’s ways to make those more interesting, and so we made those more interesting. More of a royalty product around that. Then we realized that as, as you alluded to earlier, that more mining needs to happen in the next 25 years than happened in the last 250 years. Realized that doing that without trying to make it sustainable, is a non-starter, right? So, we have to find ways to make mining more sustainable. Technology is part of that solution. So, we’ve built a technology business around that, right? So, it’s a matter of everything we do, we say, hey, this could be done better. What’s a way to do that better? Let’s create a product that takes advantage of that. And then just that mindset is, yeah, it’s driven us to where we are now.

[00:59:34] Jamie: I mean, what you’re saying sounds very basic and obvious, but

[00:59:37] Oskar: I’m good at that basic and obvious stuff.

[00:59:39] Jamie: But no one, there’s very few groups that do it. Like, it is an outlier, I think, to have this sort of range of, of products and solutions, and yeah.

[00:59:49] Oskar: Long may it last. I don’t know that I’m going to stay an outlier. I found I guess one of the, that imitation is a serious form of flattery, and that quite a few of my peers have, over the years, looked at what we do and sort of Taking a page out of our book and trying to accomplish the same. So, and I have no objection to that. I think it’s actually good for the industry overall to have more investable options than they do now, you know, more power to them for doing that. And I think it’s good for mining overall. And my view is always what’s good for mining overall is good for Orion. So, you know. Welcome to the party, frankly.

[01:00:29] Jamie: Is there anyone or any group that you look up to or take inspiration from or learn from, whether in mining or other industries, historic, otherwise?

[01:00:41] Oskar: I wouldn’t say there’s another group in mining that I kind of look up to in that sense, but I would say that a lot of the innovative ideas that we see in mining actually come out of the oil and gas space. So, we always keep an eye on that you know, industry and get some ideas about how they do things. And I think that’s stood us in good stead. Examples on the, on the royalty side that we talked about before, the VVP structures that they have in oil and gas are much more flexible in some ways than what we do in streaming here in the mining space. So, borrowing some of those ideas is something that we took a look at and have implemented. So that, that’s an example of that. So, there’s a broader range of ideas to go after. Some of the stuff that we’re looking at in technology, we’ve borrowed some ideas from, from some of the other VC firms, you know, the Breakthrough Energy folks in this world. And so, they have some pretty good structures and some good ideas on how to deploy capital. So, you know, borrowed those ideas.

[01:01:47] Jamie: Do you think there’s ever a world where Orion diversifies the commodities you invest in? Do you do energy or agriculture or commodity adjacent, like infrastructure for commodities?

[01:01:58] Oskar: I would say if there is a place that we would go to, it’ll be in the last thing that you just mentioned, which is really infrastructure.

[01:02:06] Jamie: Terminals and storage.

[01:02:07] Oskar: Yeah, exactly. So, mining is the beginning of a processing supply chain that ends with finished goods, right? And there’s a world in there where there’s mines, there’s processing, refining. Right? And then there’s a little bit, you know, sort of end use, you know production. The Chinese have, as you know, built way too many smelters and processing plants now. But specialized processing plants I think are something that would be very interesting to get involved in.

[01:02:40] Jamie: Yeah. I’m always, I’ve always been fascinated by this story of Rockefeller controlling oil and gas by controlling the railways, right? Being able to, so no. And I recently invested in a frac sand terminal in North Dakota, and I’ve always been interested in those, those key choke points for assets and how, and this has been like a pet fascination for me for years, and saying, why don’t more mining companies, and the traders do an excellent job of this, but why don’t more mining companies try to own and control these key choke points, and I don’t know if all of them do and they find themselves exposed to that. So, I don’t know where I’m going with that, but I’m, I’m happy to sit here and say that.

[01:03:23] Oskar: No, no. Look, it, it’s fair to say that mining companies are. generally, run by people that, that are engineering, geology focused engine, you know, sort of process guys. They’re not sure strategic thinkers. And for them, the big step out is to buy another mining company. Right. And you know, there’s very few of them that decide, okay, I’m going to own, you know, I’m going to own a part of the, from the mind gate to a port and put in the port and we control access through that. A little bit of that happens in Australia. I mean, there’s this sort of whole Fortescue rail situation, right? So, there’s a little bit of that, but by and large, I think mining companies have been, you know, asked to stick to their knitting on that front, and I think they take the view that mining is hard enough as it is. Not to add something that they don’t really understand to it. The potential answer, the direction might be the other way around, right? Where the OEMs and the end-users kind of migrate upstream to the mining areas, right? I mean, the U. S. had its history of that in the past, where Ford Motor Company vertically integrated all the way back to making steel for the cars that it, you know, so I don’t know if everything, you know, is all cyclical again and we end up going back to some kind of more vertical integration that way.

[01:04:37] Jamie: And this kind of gets me back to my point earlier. We’re like, at what point is, you know, Tesla’s cost of capital is going to be so low that they can just buy any and all lithium mines that they want in the United States or nickel or whatever it is they’re trying to control for, and the mining companies won’t be able to compete with them. Does that happen? I don’t know. But

[01:04:57] Oskar: I don’t know. I mean, it might. But would that, would that really be a problem? It wouldn’t be a problem. It’d be great. Yeah. Okay. I’m not, I’m not an object to that, you know.

[01:05:08] Jamie: So, we’re just over an hour now and you’ve been very generous of your time. So, I’m going to wrap it up, but I have. Three fun questions for you.

[01:05:16] Oskar: Oh, good.

[01:05:17] Jamie: Okay. So, alright. Picture this. Orion’s gone. You have a hundred million dollars. You’re allowed to invest in one commodity in the form of a stream or royalty. What do you do?

[01:05:30] Oskar: I invest in a tin stream.

[01:05:32] Jamie: Tin stream? Interesting.

[01:05:36] Oskar: You asked.

[01:05:36] Jamie: I asked. Can you elaborate?

[01:05:39] Oskar: Oh, it didn’t say I had to elaborate, but alright. I think tin is the forgotten commodity.

[01:05:43] Jamie: Yeah.

[01:05:44] Oskar: I think it’s super important for all electronics. I think it’s largely replacing or has replaced lead as a soldering agent. It’s super important in a couple of other pretty interesting technologies. It’s, you know, alongside copper, it’s important in brass for armaments and munitions. It’s also the bed that in which you make all flat glass is a molten tin bed.

[01:06:10] Jamie: And where does most tin come from? I know Indonesia is a big supplier.

[01:06:13] Oskar: Indonesia, Bolivia, is another big country.

[01:06:18] Jamie: So, no stable jurisdictions.

[01:06:20] Oskar: Yeah. And there’s no tin mines in the United States or anywhere near the United States. And yeah, and the Congo is the other big one DRC. And, and it’s important, it’s incredibly important metal and we don’t have enough of it and there are not that many new mines being built. It’s tough to find. So, I’d love a tin stream. Okay. Thank you very much.

[01:06:42] Jamie: Next question. We are currently sitting in New York City Why have you not moved to Florida like all the other financiers and in New York at this point? I thought that was the trend post COVID.

[01:06:54] Oskar: My wife won’t let me while the kids are in school. It’s the honest answer to that question.

[01:06:58] Jamie: Fair enough. Okay, two more then we’re done.

[01:07:03] Oskar: Okay.

[01:07:04] Jamie: There’s gonna be someone who’s listening to this podcast Who’s got a lot of money and says? You That Oskar guy seems pretty smart. How do I give him my money? What is the correct, can an individual invest in Orion or is this purely for institutions?

[01:07:20] Oskar: Purely for institutions.

[01:07:22] Jamie: Okay. So, for those of you who are thinking that you’re out of luck, sorry. And then the last question, if I’m a mining entrepreneur in my thirties, forties, twenties, what have you, and I think I’d really like to get some money out of those guys, what do I have to do to get that, for the project that I’m building or working on?

[01:07:42] Oskar: You need to have at least a pre-feasibility study, preferably a feasibility study. You need to have a techno economic model that goes with that feasibility study. You need to show us your permit application plan. And you need to give us access to all the data that you have in your data room on the geology of the mine that you’ve, you know, discovered what kind of processing plan you have, what kind of mind plan you have. That’s all part of the submission that you’ve made to us in the first place and the feasibility. We need to be able to assess your ESG credentials to some degree and then just contact us if you have most or all of that stuff.

[01:08:24] Jamie: Okay, so we have now eliminated 99.9 percent of Canadian companies. For that 0. 1 percent left.

[01:08:30] Oskar: No, you have not you don’t have to have everything fully baked, but you have to show us. That you’ve thought about it, that you have a plan to address it, and that you may need some budget to complete it. That’s generally enough. We will work with you. In some cases, we work with companies for several years to get them up and ready to construct. We’ve also been not known to buy mining companies outright. So, if you have something that you think is worthy of, of that kind of attention let us know.

[01:09:08] Jamie: All right, Oscar, thank you very much.

[01:09:11] Oskar: Thank you, sir.

Picture of Jamie Keech

Jamie Keech

CIO; Editor

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Nick D'Onofrio

Head of Research

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