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Yukon

The Importance of Site Visits

Greg personally visits mining sites all over the world to see for himself if everything checks out with the companies he evaluates.

It is one thing to read about a company on their website or in the marketing materials, and you should do that when evaluating a company. But it is something very different to actually see what is going on first hand at the location of an exploration, development, or production story.

You learn things you would never otherwise learn by being onsite in person.

While on his site visits, Greg interviews executives, geologists, and miners to determine if their companies are indeed worthy of our investment. In most cases there is significant travel to and from the sites he visits and this offers valuable time to get the most important insights. "When you are together in a car or truck for five hours with the management team, it's hard to hide any details." (A quote from Greg)

Many times on site visits Greg will also ask to talk with residents and politicians to weigh whether a company's mining project might be jeopardized by local opposition, excessive fees, nationalization, or other unforeseen developments.

Personal Experiences on Site Visits

I remember one site visit I did to China where I had dinner with a key politician and his wife to find out if a certain company (SilverCorp) was going to get their permit. Many in the western world were of the opinion that SilverCorp would never get their permit to move forward, so this was one of the most important parts of the trip.

After the pleasantries of an exceptional dinner (real Chinese food, not the Chinese food we get in America) we got down to business and I brought up the main concern of the permit. I told him if I was going to get behind SilverCorp as a newsletter writer I had to know that the company would get this critical permit.

The politician took my hand and looked me straight in the eye and said without hesitation, "The only way SilverCorp doesn't get their permit is if they don't turn in their paperwork."

I understood without a shadow of a doubt this was true and emailed my subscribers that SilverCorp was now my number one stock and not to worry about the permit. This totally went against the consensus thinking at the time by many prominent people in the junior mining space who told their people to avoid buying the company.

SilverCorp did get their permit months later and the stock went to $22.00 a share making my subscribers a ton of money.

The lesson being that had I not met with this politician, I never could have had any real confidence that the company would or would not get their permit. I would have been left to listen to here say from this or that source. I had to find out for myself and the only way to accomplish this was to set up a meeting with the man in charge of issuing the permit.

In this instance, the site visit was everything to our success.

Another part of the site visit that I find incredibly valuable is to see where the project fits into the surrounding area or territory. How accessible is the project by road, helicopter, power, etc.?

Looking at pictures on a website can never tell the real story.

So many times I have been told that such and such a project has nearby infrastructure etc. etc., only to find out that this is far from the case. You really have to ask the tough questions and verify if what they say is true. I have learned too many times that you just can't trust what you are told. You must find out for yourself and make your own judgment.

I remember an experience I had in the Yukon when I was one of the first to talk about the prospects and merits of the potential for major gold discovery in that area. After a week of meeting with everyone involved on the site visit, my only real point of concern was the lack of power in the area.

To satisfy my concern, I was told by government officials that a $400 million dollar power line extension to the area was already planned. At the time this all sounded quite good and I decided to move forward, recommending many companies for purchase in the highly prospective Yukon gold play.

In the beginning things worked out as all kinds of money flowed into the Yukon to make the next big discovery and our stocks performed rather well. But then the unthinkable happened. The Canadian government, who said the power line was going to be built, suddenly decided to scrap the project due to budget cuts. It was a devastating blow to all the activity in the Yukon and things came to a screeching halt.

Lesson learned, my gut told me what the major concern was because of the site visit, but I took the government's word they would build the power line. Without being there on the site visit, I would not have known that power was even an issue.

The end result was a tough one to swallow despite the fact that the Yukon holds major new gold discoveries at some point in the future. There will be another rush into the Yukon but only AFTER A POWER LINE IS BUILT INTO THE AREA.

One last point that I would like to make about the importance of site visits is that it takes away a lot of the hocus pocus that some in the industry like to promote. In most cases, I already know who the real deal companies are before I ever do a site visit, but I have cut some trips short when I see activity that is not on the up and up.

There have been a few occasions when I feel like I am on some kind of dog and pony show and things are just not adding up. In one circumstance in South America, I ended up walking away when I realized the maps they were using weren't what they said they were. It was a case where they hoped nobody would notice. As the saying goes with those of lower moral character, "If you can't convince them, confuse them" and hope they let it pass.

In summary, site visits allow the layers to be peeled back so you get the most accurate picture to see if a company meets our criteria for investment. You have to know what questions to ask and you need to judge whether the answers you get are satisfactory or not.

Site visits do not guarantee success in our investment endeavors but they certainly reduce some of our risks, especially if we correctly read the answers we get from our questions.

While there are definitive answers to some questions, geology is a subjective science requiring interpretation and serious contemplation as to whether a company can be successful. I have found over the years that when it comes to exploration mining stocks, the only thing that is true at the end of the day is what the drill holes and the share price tell us.

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Greg standing next to the tires of the huge hauling trucks at Barrick Gold's Pipeline Gold Mine in Nevada.

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Flashback...

Greg McCoach, editor of The Mining Speculator, was featured on CNBC in 2007 and was asked his opinion on gold prices. At the time, gold was trading for $637/ounce. He predicted Gold to go over $1,000/ounce in a 12-24 month period. Of course he was right!

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