Resource World Magazine

8 www.resourceworld.com D E C E M B E R / J A N U A R Y 2 0 2 0 RW: What are your predictions for resource investing in 2020? RR: I think 2020 is going to represent some, but not a huge improvement over 2019. Of course, the word 'improvement' requires you to identify who you are and what constitutes improvement. So, from an issuer's point of what point of view, I think that more funding will be avail- able for exploration, but it won't be on the same generous terms that the exploration industry came to expect in the last decade. Importantly too, I think the funding sources will change. The larger mining companies have newly restored balance sheets and are enjoying fairly strong free cash flows, at least in the precious metals business, as a consequence of increased pricing, so I think one of the things that you'll see is a continu- ation of the trend where the best source of funding for high quality exploration proj- ects, either through direct participation or through equity, will be the major mining companies. Having said that, at Sprott we have been very heartened by the return of generalist investors who are now co-investing with Sprott, particularly in our lending activi- ties and I would expect that as the precious metals market firms, which I believe it will, the generalist capital will also begin to be available in the exploration sector. We think that investors will continue to be fairly par- ticular about what they invest in and from the Sprott point of view that's a very good thing. During the last decade too many poor projects and too many incompetent management teams got financed which was part, I think, of the malaise that impacted the entire mining investment sector. RW: Do you think that precious met- als prices will provide the impetus for generalist investors to come back into the market in 2020? RR: I definitely do. I can also make a case for some industrial materials like cobalt and copper in the longer term because the prices for those materials is below the incentive price necessary to bring new mines into production and the demand scenario for lots of industrial materials in the intermediate term and long term looks bullish. In the very near term, although I'm not an economist, I would suggest that our current economic expansion, which is now at least 10 years old, is probably fairly long of tooth and my experience suggests that a lot of the major mining companies and a lot of generalist investors are concerned about the outlook for the broader economy. If the broad economy falters then, of course, demand for industrial materials like oil and copper falter, and the price could get softer still before resuming an upward trend that would have been sug- gested by looming supply shortages. So I think, in terms of commodity pricing out- look, the most attractive in the resource space is the precious metals. RW: What would the impact of a global recession have on precious metals? RR: I think the policy response to reces- sion is what's going to matter. Recessions traditionally have been deflationary and if the policy response is to take the bitter pill and suffer through, I think precious metals would get hurt. If the policy response is more quantitative easing, then I think the outlook for precious metals would be very bright. The market seems to believe that the policy response to an economic slow- down would be to attempt to increase the level of stimulus in the economy. One wonders, given the fact that there's almost $20 trillion in sovereign debt worldwide with a real negative yield by Robert Simpson RESOURCE WORLD MAGAZINE RECENTLY SAT DOWN WITH RICK RULE, PRESIDENT AND CEO OF SPROTT U.S. HOLDINGS INC., TO TALK ABOUT HOW RESOURCE INVESTORS SHOULD APPROACH 2020. Rick Rule, President and CEO of Sprott U.S. Holdings Inc. Outlook 2020 MINING STOCKS

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