The Biggest Problem With Junior Mining, the Story of a Mine Builder, and a Different Copper Porphyry

Visa Copper has completed all required drill permits for portions of Poplar property, suggesting regulatory pathway is clear for Pop South drilling if capital becomes available, with First Nations engagement suggesting community support for exploration activities.

“we've already had drill permits granted for for parts of the property and project so we know you can get it done and get in there and test things uh and I I think you know um the the First Nations uh people in in the district are used to mining projects and supportive of them generally and huckle Bre is a good example”

Canada remains the best jurisdiction for junior mining despite current market challenges, as it offers political stability, infrastructure, permitting frameworks, and clustering benefits (talent pools, service providers, knowledge spillovers) that offset higher development costs compared to some international jurisdictions.

“Tier one project in a world full of problem being in Canada like the first thing I did when I left baric was I'm not going anywhere in the world I'm going to St Canada and the US and that's exactly what I did I had zero intention of going anywhere else”

Creating a new company as the vehicle for an asset (rather than using an existing tired company) was the 'smartest thing' Detour Lake did, as it allowed full capitalization from the start ($35M in cash), avoiding years of shareholder baggage and negative sentiment associated with previous failed attempts on the same asset.

“the smartest thing we did at dour was to put this into a brand new company okay the the asset was valuable the vehicle was tired I called it like a a car with three or four flat tires it does not move anymore... the asset was valuable the vehicle was tired... fully funded from the beginning with $35 million in cash I was spending maybe half a million dollars a year so basically I had five years in front of me without raising any more money”

Gerald Panon's key mistake at Detour was accepting a 'tired vehicle' (Hecla's Detour asset with accumulated institutional inertia and worn shareholder base) rather than creating a fresh IPO company like he did at Detour 2008; he repeated this mistake at Gold Terra by taking a tired 5-year-old company instead of spinning out a new entity, now carrying $330M share count vs. earlier $44M at same valuation.

“the smartest thing we did at dour was to put this into a brand new company okay the the asset was valuable the vehicle was tired I called it like a a a car with three or four flat tires it does not move anymore it's it's it's a nice illusion you can have a good asset but how do you go forward and actually I wanted to do this with gotera in the summer of 2019 I said this is a great project but we need a new vehicle because your vehicle is 5 years old and it's tired”

Junior mining CEOs should hire financing specialists or work with brokers rather than personally negotiate warrant terms, because geologists are typically skilled at rocks but not at finance, making it rational to accept higher warrant dilution rather than mishandle capital raising entirely.

“a lot of CEOs have no financing abilities anyways I mean they reach out to companies to Banks um to help them Finance they that's why they do a uh a broker financing sometimes or a B deal or I mean if you completely have enough Capital behind you and those people are willing to invest again and you think that it makes sense to invest with that Network you know why would you give that work to someone else and pay them a fee for it people get a fee because they deliver some value to you and apparently you're not able”

Building a mine takes 26 months minimum when done efficiently; cost estimation has wide ranges (±20-100%); capital costs post-pandemic have increased dramatically (Kotaneelee built for >$3B vs. Detour at $1.5B for similar scale); this uncertainty argues for smaller, higher-grade projects with faster payback and lower capital intensity.

“when people ask me how much it's going to cost to build a mine in in yellow knife I'll give you a number but it's plus or minus 20 to 100% right it could be between $200 to $400 million it's very difficult to build a project today so that's why a smaller project makes a lot more sense”

When a investor has a warrant at or near the current stock price in a flat market, rational behavior is to sell the stock immediately and keep the warrant for 2-3 years of exposure, because if the discovery fails they've already recouped capital; if it succeeds, they still have upside through the warrant.

“if you have a warrant especially if it's pretty close to the current price and especially if you're betting on a big Discovery but it's unlikely to happen then why keep the stock just sell the stock and keep the warrant you have exposure for two or three years if it fails who cares because you only you know you sold your share already”

The best private placements feature a lead order from a committed strategic investor, are fully allocated quickly, have no warrants, and come from companies with low warrant overhang—these characteristics indicate the financing will not be immediately sold after the 4-month hold.

“I recently bought a company I'm not going to name name it because I really bought it just because I saw placement announcement um no warrants lead order I think they mentioned uh I think no they I don't think they even mentioned it in in the announcement they announced that it was fully allocated and that it would close within two or three weeks”

A high number of participants in a private placement (80+) is a strong predictor of post-4-month-hold share price decline, because many participants will exercise the rational warrant-clipper strategy and sell shares for the same price they bought them in the placement.

“when I see often two weeks after financing closes that 80 people participated then you almost know for sure that there will be stock available four months from now”

Junior mining companies should avoid flow-through financings in Canada except for charitable flow-through with back-end structures, because traditional flow-through buyers buy for tax benefits not conviction, flooding the market with sellers and forcing premium issuance prices that dilute long-term holders; Gerald refused flow-through at $2.70/share in 2006 and self-financed instead.

“the first deal that I was offered in December 2006 uh from the banker at dunde was flow through $2.70 and I said take a hike I'll go and finance it myself and I went on the road and raised the money okay and uh why are we doing PP these days why because the bankers are will take three 34 million every time you do a small financing how can you do a financing of $5 million while you're giving 20% to legal fees and bankers”

Barrick Gold reduced production from 8 million ounces annually to 4 million ounces, demonstrating that large-scale mining models are unsustainable; replacing 8M oz/yr production requires discovering and developing ~20M oz/yr in reserves, which is impossible in modern exploration environment; this argues structurally for shift to smaller, cash-positive mines.

“remember baric used to produce 8 million oun of gold a year and now they are producing 4 Mill million ounces what happened it's impossible to maintain the cap at 8 million ounces without buying without you cannot find enough gold when you produce 8 million ounces a year you need to find 20 every year you need to replace the eight and you need to show growth so it's impossible to carry on”

In illiquid Canadian junior mining markets with average daily volumes of $40,000-$55,000, a $2-4 million private placement financing creates an impossible supply-demand imbalance where $12 million worth of free-trading shares after the 4-month hold period cannot be absorbed without significant price decline unless a major discovery occurs.

“if they give away a full warrant or a half a warrant and there has 80 or 90 people in that financing and you assume that at least 30 or 40 are going to sell the she years after four months just because it makes sense... how can $440,000 of interest every day you know uh pick up on the two or three or four million dollars that will be sold into the market”

Craig Perry and Chris Leslie identified intensely altered and veined porphyry clasts in breccia at Three Furs target similar to the discovery signature of Lanto deposit in the Philippines, suggesting a large bornite-rich porphyry system is concealed beneath Three Furs and requires deeper drilling to confirm.

“at Three Furs area so that's a tantalizing Target as well we've got a lot to go on with there's some really really good targets here while we're in the topic of alteration I want to go back to what you just released because there's also epidode chloride magnetite alteration”

In good bull markets like 2008-2011 after the financial crash, there were hundreds of 5-baggers and even 100-baggers, making warrants an excellent hedge, whereas in bad markets warrants hurt you far more than financings without warrants because flippers have incentive to sell shares and retain warrants.

“I made an overview yesterday um of the 2008 n uh 10 11 years after the crash the financial crash and uh some there were like hundreds of of 10 beggers um or even 100 beggers there were hundreds of five beggers so in those years having warrants is amazing in bad years um they those financings hurt you way more than financings without warrants”

Wood Jam property contains a Southeast-lookalike target called Great Plains located just south of the Southeast deposit with less glacial till overburden, providing a lower-risk exploration target that could yield similar high-grade results with potentially shallower drilling.

“we've got another Target that's a southeast look alike uh doesn't have as much um overburden much glacial till as Southeast does so we want to get in and test that this is called the Great Plains Target just to the south of Southeast that could be a you know another substantial po Frey system”

Institutional investment constraints harm junior explorers: funds with minimum market cap requirements ($50-200M) cannot invest in projects below those thresholds; gold ETFs like GDX (which allows passive fund managers to delegate exploration selection) have reduced active fund managers' motivation to pick individual explorers; this structural shift has harmed junior sector access to capital.

“I think the regulation of uh compromis our sector badly U no fund without a minimum market cap will invest into companies minimum could be 50 million up to $150 $200 million market cap in most of the people that have money to support this industry so I think that is an issue the second issue is also the creation of the gold ETF for juniors so instead of buying Juniors you have somebody knowledgeable look at all the fund they've all disappear I I would be I would like to see the number of fund that were existing in say 2005 20 2015 and 2025”

The average 12-month performance of private placements with warrants over the last 3 years has been negative 23.3%, whereas the median is negative 42%, indicating warrant structures systematically underperform.

“the average 12-month performance of a private placement with Warren over the last 3 years has been a negative 23.3% whereas the median is actually it's actually way worse it's a a negative 42%”

Bought deals in the junior mining sector from 2020-2022 showed very poor performance with approximately 70-80% of companies declining significantly after the bought deal, with only 10-15 companies out of 130 studied going up, and those successes typically attributable to major discoveries or backing by established investors like Panton or the Lundins.

“for sure B deals uh really did bad performance over the last couple of years but again those years were not amazing uh the last time I did bought deals in detail was in the period 2020 2022 which was a good period but I think most of the big deals were done at the top so that that that also flawed the data a little bit but like 70 80% of the companies went down quite significantly um after a b deal and just maybe 10 or 15 companies out of the 130 B deals I reviewed um went up and in most cases there was a discovery behind it or there was a big name behind it again a person like pant or uh or the gak family lundine family”

The Canadian junior mining sector is over-financed with too many companies; Rick Rule and Antonio agree on this, and while it might seem problematic, it reflects natural market dynamics where capital-raising ability is now a key competitive skill separating winners from losers.

“Rick R says that the sector is actually over financed when you look at it at at you know at its H with all the companies that a lot of them I don't want to say the vast majority but Pro well definitely a lot of them just don't really do anything so well your your advice I suppose to CEOs here is good it's just become good at financing”

Strong companies with existing major institutional investors (like Eric Sprott-backed companies) and legitimate discovery prospects (like Q2 Metals with lithium discovery) can overcome warrant overhang effects because continued positive news momentum and institutional support prevent coordinated selling from dominating the stock price.

“Q2 medals we looked at last week and the week before um lithium Discovery lots of stock against it I would expect after so many financings and share issuances uh but also it it stays quite strong um because of the good Discovery so it's not that it's a complete you know a dry fact you have you still have to look at what's happening with the company and um it will not always go down necessarily but it's it's a very dangerous moment to to trade a company or to buy a company when so much stock is free trading coming free trading very soon”

Gerald Panon was forced out as CEO of Detour Lake in late 2013 partly because of board composition changes and lack of internal board allies, and partly because gold fell from $1,700 to $1,100 (35% decline) in Feb-April 2013 during ramp-up, which hit stock from $20 to $10 and forced an unplanned financing when COO failed to warn him of $100M shortfall—making him a scapegoat despite delivering the mine on time.

“gold went from $1,700 to $1,100 in less than three months from February to April 2013 in our first years of production so the stock went from 20 bucks to $10 we had to do a financing because uh the Chief Operating Officer back in the days did not warn me long in advance that he will have a shortfall of $100 million”

At Detour in June 2008 (September 2008 crash), Gerald had $85M in bank with 44M shares outstanding; in September 2008 stock crashed from $20 to $3 but bank balance remained stable; this buffer allowed disciplined capital allocation despite market collapse, contrasting with Gold Terra's current position where he holds $330M shares with high cash burn.

“in June 208 the stock is $20 and in September 08 what do you think the pric is what was it $3 wow and how much money do we have in the bank $85 million how many share outstanding 44 wow that's aaric difference”

Private placements in bear/neutral markets underperform because timing is nearly impossible to predict; better strategy is to buy open-market shares of companies at depressed valuations when they trade below intrinsic value, rather than participate in placements where you're locked in at current market price plus dilution.

“but ideally you know buying a placement in a bad Market amazing but then only a year uh or less before the market turns but since knowing when the market turns is the most difficult thing uh you cannot really do that”

Over-exploration of Yellowknife region over 20+ years has left it under-explored relative to its potential, with Panton's team spending only $11M on exploration by end of 2023 at Gold Terra despite the district's size, suggesting massive drilling upside remains to be tested.

“K knife is undere explore has not been explored properly over the last 20 years even my exploration effort today are a very small part of what we could do we could spend five to1 million a year in [1:10:10] Exploration I've already spent 11 million as the end of 203 2023 on the con M Property”

When a stock trades at 10-20 cents and warrants are priced close to current price, the warrant situation becomes 'a deal' for Luke (negative), because the warrant overhang will constrain stock upside materially.

“if if a stock trades at 10 cents or 20 cents and the warrant just trades a little bit above that it's it's very very often a deal for me um”

Flow-through financing in Canada is 'a big mistake' because it requires finding buy-and-hold investors focused on tax benefits rather than investment returns, creating a structural disadvantage compared to private placement structures without flow-through requirements.

“flow through in Canada is a problem you can do charitable flow through with the back end but the traditional flow through is a big mistake because people buy it for tax purposes so you need to have somebody who buys it the back end for a long-term process because in this market if you don't have a long-term vision of three to five years don't get involved stay away”

Visla Copper's previous explorers (6-8 targets tested over 30 years) achieved 5 discoveries, an extraordinary strike rate suggesting Woodjam may sit atop a major porphyry district; combined with 103 magnetic targets identified by recent MAG survey (each resembling discrete 'magnetic donut' anomalies) and one test at Megaton confirming discovery, the property has 6-8 target-to-discovery conversion rate.

“the previous explorers over the last 30 years have tested about six uh seven or eight different po Frey targets of which five resulted in Discovery so that's very notable um and and a very interesting outcome”

Gerald Panon's success in building three mines (Sakoa Buzwagi, Detour Lake) came not from unique brilliance but from: (1) decades of mentorship and observation of underground mines (visiting one per month early in career), (2) building teams with people like Louis Dian and John Marley who taught him 3D visualization and mine engineering, (3) focusing on projects in stable jurisdictions.

“I visit every gold mine in Ontario and kebec that I could get access to it I was my goal was to visit an underground mine once a month okay and part of that period of time I was doing it with John Mar L from asit because we worked together back at and with J Buu which I have a lot of respect for so when you look at those people that you work with they guide you they teach you you take you listen you take whatever they tells you”

Visla Copper's Woodjam property contains three distinct copper-gold mineralization styles: (1) calc-alkaline porphyry systems (classic BC-style), (2) alkaline porphyry systems (less common, similar to North Parks district), and (3) structurally-controlled high-grade epithermal-like zones at Deerhorn; this diversity suggests a large, multi-phase Stratovolcano complex.

“what we found when we got out there is that these these systems here are um they are some of the the PEs on the property are a little bit different to to other poer uh in British Columbia in that here we've got both a mix of classic sort of calc alkaline and then alkaline porry systems”

Even if warrants are so far out-of-the-money that they're not immediately concerning, their historical existence signals management's past willingness to issue dilution, which makes Luke question whether management would issue warrants again if needed, creating a lingering concern about future dilution risk.

“I think it's also even if the warrants are no longer a problem it gives you a little bit of a concern because they could do it again if they were issuing so many warrants back then why wouldn't they do it right now uh for me so for me it's always an indicator um”

Craig Perry believes the junior mining market is at the earliest stages of a multi-year boom: mid-tier miners (Skina ~$14 from $4, Visla Silver ~$3/~$1B market cap) and developers are surging; historically it takes 18-24 months after mid-tiers move before capital flows to explorers, suggesting mid-tier moves ~5 months ago signals junior boom may be 12-18 months away.

“I like to quote my mate Bryce roxor from rugby mining here he um he's always sort of told me you know he's been through four or five booms now aging him a bit but uh you know makes the point that it really takes you know the mid tiers start the Mages move up in price the mid tiers and then you start to see m&m;a kickoff but it's really once the mid tiers have started and developers have started to move”

Craig Perry has invested $1.5M of personal capital into Visla Copper and plans to continue buying on open market, with goal of riding the company through development into production; this long-term insider accumulation signals conviction and reduces shareholder risk of management conflicts, but also limits management's exit optionality.

“I've put about one and a half million into the company of my own money so far and uh continue to do that you know I think we've got some outstanding uh we've got a great resource base outstanding targets lots of opportunity to get more good results and and grow that resource base into a rising market that's how I'll make money out of this is just riding that W”

Visla Copper will not drill Woodjam in winter 2024-25 or spring 2025 due to capital constraints; with $3.5M in bank finishing 2024 with ~$1M, the company has runway into Q1 2025 but wants to avoid dilutive financing until market support improves; the goal is timing financing to coincide with market euphoria rather than funding through bear market.

“we won't drill this winter gee we've got some targets there I'd love to we we did a bit of soul searching Antonio two weeks ago once we've got the final results look out for a news release on the IP from that pop South Target um it's uh it's an astonishing Target uh we put out news of the soil uh anomaly over it it's classic”

Copper prices are the key lever for junior mining upside: copper hit all-time high of $5.10/lb in March 2024, currently trading ~$4.40/lb; China is loosening monetary policy to stimulate demand; data centers (particularly Microsoft's purchase of Three Mile Island nuclear plant) are driving new copper/silver demand; copper prices typically rally Nov-Dec as Asian markets restock, creating seasonal tailwind.

“copper the copper price of course back in March hit an all-time high around $510 we're back at about $440 today China uh is is is talking more and more about um uh loosening money monetary policy and bringing more Capital uh into their system that's of course a Big Driver you're starting to see real data center demand in the US particularly Bill Gates of course Microsoft's now commissioned or bought that threemile Island nuclear plant”

Visla Copper's market cap is ~$18-19M, giving investors ~4 billion pounds of copper and ~2M ounces of gold at current valuation; 10 years ago, the combined market caps of Universal Copper and Wood Jam (pre-acquisition companies) would have exceeded $100M, implying current 80-85% valuation discount despite superior geological definition.

“we're very very cheap you know market cap today is probably 1819 million uh and for that you get4 billion pounds of copper um nearly 2 million ounces of gold uh you know extraordinary buying opportunity as far as I'm concerned I don't know I think that the combined market cap of both Universal copper and uh and wood jam the companies that owned our projects would have been North of $100 million 10 years ago”

Visla Copper's internal scoping study work with Odeon Engineering indicates the Woodjam project could be economic at $5/pound copper and would improve significantly at higher prices, though Perry will not release detailed numbers pending public market disclosure timeline.

“we engaged oeno engineering back in March to start looking at internal very much internal scoping study type work... we've looked at all of that come up with some numbers you know we won't release anything publicly what I can say is that it it looks good”

Fund flows into junior mining have turned from redemptions (as of one year ago) to inflows (by late 2024), visible in conversations with major mining fund managers at Beaver Creek and European roadshow, indicating a structural reversal that could drive significant capital reallocation into junior exploration companies.

“I have been doing in the past 6 weeks uh is quizzing fund managers about uh fund flows uh and if you go back a year you talk to say Mar manover at Sprout... everyone would tell you back then they're seeing redemptions this time around Beaver Creek... people are saying they're starting to funds trickle back in uh to their funds”

Major mining companies like Teck (formerly Teck Resources) staking massive areas in British Columbia (Stacey project: 300km x 50km or 300,000+ hectares) suggests industry is actively searching for large-scale, long-life deposits with billion+ ton ore bodies at 4% copper equivalent economics.

“we've seen Majors come along in the province forcu for example Stak a huge sued of ground to the west of our uh uh wood jam property uh it's an area you know it's must be one of the biggest staking rushes in British Colombian history they stake at 300 km long uh North South by 50 km East West block of of licenses well over 300,000 hectares”

Helicopter-accessible locations with good infrastructure (paved roads, grid power) allow year-round drilling in BC interior; Woodjam property has logging roads and nearby infrastructure making it cheaper to operate than more remote deposits, reducing cash burn and operational complexity.

“the neat thing about the proper is that it's you know such a good location you know grid power paved roads across it lots of logging roads so you can operate year round there”

Physical gold demand is outpacing supply according to Panton, evidenced by frequent 'sold out' situations when attempting to purchase physical gold, suggesting underlying bullish fundamentals for gold prices and companies producing gold.

“there's no more physical goal try to buy physical gold sometime you see oh sold [58:30] out sold out sold out there's production I mean there is but the demand is outpacing the supply”