Gold, from ancient times to now, has been an indisputable store of wealth and also a way to hedge against geopolitical volatility and inflation. It is a well-regulated and established market. In the 1990s, we went through a crisis when central banks started to sell their gold holdings. This caused the price of gold to collapse, but afterward, the geopolitical situation forced central banks to understand the role of gold in maintaining wealth and therefore their holdings. Gold has a well-established role in the market while cryptocurrencies still have to be regulated and understood to compete with precious metals. It can be used to complement gold investments but cannot replace it at the moment as the role of cryptocurrencies in the market is still not fully defined.
Our approach is opportunistic. We like to buy assets that are unloved by the market. While a distress asset purchase will guarantee more work, the low purchase price limits the downside price and offer good upside potential. For example, our recently acquired Black Fox complex was originally purchased by Primero Mining in 2014 for US$300 million along with the assumption of US$140 million in liabilities. Then they invested US$120 million bringing their total investment to US$560 million. We bought it for US$35 million, which was equivalent to paying 6 cents for every dollar they invested. It came with over 1 million ounces in resources, annual production of 40-50,000 ounces of gold however with a short mine life, an operating mill with excess capacity, numerous exploration targets and a US$190 million-dollar tax pool, which means we can shelter US$190 million of future profits.