Paul Isaac of Arbiter Partners Capital Management presents “Gold, Mines and the Lassonde Curve,” framing gold as a large but cyclical asset—roughly $500 billion in daily trades, with above-ground supply equal to about 16–18% of global M2—that has retreated to around $4,000 an ounce from roughly $5,500 earlier in the year and looks modestly expensive against historical measures like M2 and real rates, a premium he attributes partly to central bank buying. His central point is that owning a gold mine means underwriting far more than the gold price: geological quality, permitting (now a severe impediment), resource nationalism, political risk, operating costs, capital intensity, and debt structure all bear on returns, and with the average time from first discovery to commercial output in North America running about 20 years, most prospective resources never become mines at all. Isaac proposes a framework analogous to risk arbitrage—targeting announced, medium-scale projects that already have most of their financing in place or strong internal cash flow, favoring 100,000–200,000-plus ounce production in politically stable jurisdictions backed by reputable sponsors (Lundin and G Mining warrant a premium), avoiding excessive debt and dilution traps, and looking for state transitions from single-asset to multi-asset and from 100,000 toward 300,000 ounces that turn a developer into a likely takeout candidate.
He applies that lens to two names. Osisko Development (ODV) in British Columbia is fully funded toward initial production of roughly 200,000 ounces in 2028 at an all-in sustaining cost of $1,200–$1,400 an ounce; its enterprise value has fallen to about $800 million with the lower gold price, yet at 200,000 ounces the mine could be worth $2.5–4 billion at current prices, with longer-term geological potential toward a 500,000-ounce property worth $10–12 billion if the gold cycle runs five to seven years. Newfound Gold in Newfoundland has pivoted from narrow high-grade veins to a satellite open-pit, hub-and-spoke model and is merging with Maritime Resources to add a mill and roughly $60–80 million in annual cash flow for several years; at an enterprise value near $600 million it could be worth about $2 billion in production, with a large land package whose exploration upside is not yet priced in, targeting early 2028. Isaac favors a basket approach with 3–5% positions for names clearly near production, views silver as more expensive relative to gold and drawing a more speculative constituency though governed by the same framework, and finds royalty companies unattractive at current valuations—smaller royalty names are cheaper, and Triple Flag remains a holding.
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