In Episode 4 of CEO’s Get Real, Howard Crosby, CEO of Nevada Comstock, joins host, Christopher Marston, CEO of Exemplar Companies. Mr. Crosby has an impressive background in the precious metals industry, being involved with successful mining projects over the last 30 years. Nevada Comstock formed a few months back, which is composed of an impressive team with deep experience from a technical and management standpoint. The team holds over 100 years of combined experience.
“With Nevada Comstock, what we’ve done is we’ve focused on properties on patented mining plains which is incredibly important differentiation factor. All 3 of our properties have past production history and have significant opportunity to expand and restart operations, and we focused primarily on precious metals gold and silver, however, we have substantial copper and base metal byproducts as well,” explains Howard.
Howard Crosby’s Impressive Background & Experience
Howard graduated from college with a Bachelors in History in the mid 70s, but was plunged into the mining business quickly working from United Nuclear in the uranium business in the late 70s and early 80s.
Major Projects He has Worked On:
1990s-2002: “I met my current partner in the early 90s and we’ve been involved in wide variety of mining projects since then. In 2002 we bought the Mesquite Mine from Newmont Mining Company, one of the largest gold mining companies, they had shut the mine down when it was on care and maintenance, and we raised about $15 million and bought them out and continued leeching the existing gold from the existing pads and ultimately we were a little early in the gold market in 2002 it was just emerging from a deep slumber, but we successfully sold of the project and they turned it into a 175,000 ounce a year producer, and its continuing to operate in California,” Explains Mr. Crosby.
2004: “Then in 2004 we were involved in a project called High Plains Uranium and took the company public on the Toronto Stock Exchange, and we were bought out two years later for a 5x win for our investors in the public round,” Mr Crosby continues…
2006: “In 2006 we bought the Galena mine, the second largest primary silver mine in US history from coeur d’Alene mines, they were about to shut it down, but we bought it from them for $15 million, raised $65 million on the Toronto stock exchange, its still producing today, but we sold our interest off to a company called America’s silver about six or seven years ago, but its still producing at a rate of about two and a half million ounces, so its a very significant primary silver mine.
Recent Years: “More recently, I’ve been involved as an executive chairman of an operating gold mine in Western Utah, which is currently producing about a thousand ounces of gold a month.
I have a lot of experience and have worked on a lot of different projects, we think the timing now for investors looking to diversify into precious metals could not be more propitious,” Howard finishes.”
History of Gold
“People throughout my career always ask me what I think of the price of gold, and I say “ gold doesn’t have a price, gold is money, it has an exchange rate, you wouldn’t ask what the price of a yen or the price of a euro is, you would ask what the exchange rate is,” Explains Mr Crosby.
The Federal Reserve was created in 1913 during the Wilson administration with the specific mission of protecting the value of the dollar.
“Now during that time,” Howard begins, “the dollar lost somewhere between 97% and 96% of its purchasing power, so you have about 3.5% of value left from the 1913 dollar, yet in 1913 an ounce of gold was worth $20.67 an ounce, and it was revalued in 1934 to $35 an ounce. Today it closed at $1,285 an ounce on the spot market, so its safe to say for someone who held an ounce of golden 1913, that ounce of gold has preserved its purchasing power over 107, while the US dollar and all other fiat currencies have lost somewhere around 97% of their value,” Howard explains.
In other words, if someone had stuck an $100 bill back in a safe in 1913 for their great grand children, today it would buy about 3 cents worth of goods, but an ounce of gold would have bought the same amount of good and services it did in 1913 so gold is the only money that is not someone else’s liability , the US dollar is a liability of the US government, the Japanese yen is a liability of the Japanese government.
How Modern Technology has Impacted Mining Industry
Christopher Marston asks, “Is it true that with current technology and the properties access to monetizable assets nearly right away?”
“At Lexington, besides the dumps which will provide some money, there’s really really. Big upside on this property, there’s a series of like seven veins that were minted in the past and they all ran better than 20 or 25 ounces of silver with seven or eight combined lead and zinc and a bit of gold. In today’s dollars we are talking about ore that’s running $400 a ton or better and our estimated mining cost and processing cost per ton of ore mined from these high grade veins would be no more than $150 all in,” Howard explains.
“We believe there is potential for very substantial extensions of these veins beyond where the old timers left off, there’s a very clear geologic recons why this is the case, but basically there was as post-mineral bed that came in of non mineralized material so when the old timers were sinking they hit this bed of non mineralized material they just stopped cause they had no way to determine how much of that there was or if the veins picked up later, but we now know as a fact these were post-mineral dikes that came in and underneath these dikes these veins continue with depth.”
Industry Lingo: What Is a Vein?
“A vein is typically where the mineralizing fluids have come up into a crack in the rock and maybe there’s a suitable silicified quartz matrix like a quartz vein that will be anywhere from the small end of something that’s bindable, maybe three feet wide up to 10 or 12 feet wide and that vein is actually very much like, envision a long hallway in your house , and that hallway is filled with silicified material that has material base of precious metal contained within it,” Howard Explains.
Are Veins Largely Vertical? Meaning through the Earth?
“Ideally they are vertically but sometimes they get laid over at maybe a 45 degree angle and that make the mining more difficult because the much doesn’t run, as they say. But you hope for a nearly vertical vein because then gravity is working for you all the time
Christopher Marston asks, “A prior group gave up or stopped. What happened since then that maybe you realize this could continue?”
“They were operating back in the 30s, they don’t have the same type of equipment we have , and there was another tunnel driven in the district at a much lower elevation in the mountain that intersected one of these veins of depth so we have all kinds of evidence that these veins continue below where the old time miners left off in the 30s.”
“How deep could they go in the 1930s,” Christopher asks.
“They went in with attitudes, they didn’t sink a shaft they drove a tunnel in at different levels on the mountain, and we would do the same thing, we start with the tunnels that are already there and sink what’s called the winds though the dike and we drill test the veins from existing tunnels that are already there and accessible.” Howard explains.
“In 2020, we are going to benefit from workings that were developed years ago, it would cost us on a reasonable guesstimate 20 million dollars to replicate if we had to start from scratch , they’re already there they are open and we could start right there,” Mr Crosby finishes.
Competitive Landscape of the Industry
“ Of course there is competition in the industry,” Howard begins, “ Our thesis here at Nevada Comstock is to short-circuit that by dealing with properties that are already largely developed. Biotech upside without the really long lead time that you expect in other mining ventures. This business is very rare, and you know there are a lot of similarities between precious metals exploration and development and biotechnologies because in most cases, you go years and years spending lots of money with nothing coming in, when you go through phase 1 and 2 trials, and spend 10s of millions of dollars trying to get something approved for sale, but once you get there you can have a huge return, mining is the same way particularly if your starting with what I would call a “green field site”, where from discovery to the time you actually pour your first gold bar It could be anywhere from probably never less than 10 years to 15 to 20 years from the time you make the initial discovery to when you start actually making money,” Howard continues…
“When the market is bad, you have to keep your costs really really low so that you can scrape by and make a little bit of money even when the prices are bad, and then when the prices go up, don’t let your costs go up, keep them really really low so you can make piles of money in the good times.”
State of the Market in 2020
“We’ve seen an interesting turn in the market in the last 5 months. The precious metals exploration and development industry has been through about a seven or eight year down cycle where very little money as spend developing new projects. The bulk of exploration financing for small companies historically have come out of Canada, has been financed out of Toronto of Vancouver, and you know, they tend to chase the latest and hottest idea.
A few years ago with the development of the electric car industry and the lithium batteries they were all chasing lithium properties all over the world, everywhere they were looking for lithium. It ran up the price of lithium stocks and then the lithium boom died out and the next boom was cobalt, everyone wanted cobalt properties. That boom also died out and now people have turned to marijuana. Canadian markets has raised 7 billion dollars for marijuana deals.
So there wasn’t much money being put into the sector for precious metals exploration, and now that’s all starting to change but you know I think we are starting from a much better place since our prosperities are already developed, we are moving to the next stages.” Howard finishes.
Christopher begins, “So you’re saying it’s kind of been out of cycle with other fads that have been chased by the marketplace?”
Howard explains, “Yes, it’s been totally out of cycle for 7 years. You’ve had that going on with the sort of the economic trends of the pricing pressures in previous metals going down, and everything cyclical so you have a combination sort of coming into economic viability at the same time as look at what’s happening in the economy plus the fact that your not starting from scratch here. The last time we had a peak in the gold market was in 2011 when it peaked at just over $1900 dollars briefly and then retreated all the way back to under $1100, it was a long slow grinding downturn in the sector which began to turn around about a year ago.
“What is the price now?” Christopher asks.
“About $1785 an ounce,” Howard explains.
Nevada Comstock’s Experience with Exemplar
“You’ve been working with us getting ready for your round”, Christopher Marston begins, “You’re working with some smart people on our team , what’s been your experience so far?
Our experience with Exemplar has been 100% positive,” Howard explains, “I think the guys on your team have been very helpful, were put together an outstanding presentation and they’ve helped us to refine it, perfect it, and make it more understandable to the layman investor that’s not steeped in gold mining, silver mining, or base metal mining. So we are very excited about working with you guys and we want to go out and get this raise done and get busy!
And When CEOs Get Real….
“We are at a time in history, Howard, that we are talking about erasing it with statues and all this crazy stuff we’re talking about, and you are I are talking about stuff that people haven’t even awoken to, right? Which is there’s just this beginning of an awareness about value theory and what marxism is and you know, labor theory was and isn’t it amazing that people haven’t woken up to this?” Christopher asks…
Yes, I’ve just been rereading a book I read some years ago called “When Money Dies” and its the story of the Weimar hyperinflation in Germany in 1923 but, I think the key point to me is, most people don’t realize how fast it can happen, most people think well if inflation started to ramp up a little bit we’d have a chance to figure it out and bring it back under control basically like Volvcker did in the early 1980s by raising interest rates to 20% and so ringing the neck of inflation, that’s no longer possible! When you have a 26 trillion dollar national debt, if they let the interest rates go to 10% we’re screwed , interest on the debt would consume 100% of tax revenues. They have to keep the interest rates close to zero. They cannot raise them, because they have no room to do that,” Mr Crosby explains.
Chris Marston asks, : “Isn’t it remarkable how few people understand this?”
Howard: “If you look at the history of the federal reserve, the last time we had a federal reserve chairman and a president at the same time that were committed to maintaining the purchasing power of the dollar was the early 1960s when William McChesney Martin was Chairman of the Fed and John F Kennedy was President. Kennedy believed that the federal budget was something that needed to stay in balance, and Martin famous saying was “to take away the punch bowl just the minute the party started getting going good” so its not to let the economy get overheated with hot money and of course we ere still on the gold and silver standard during the Kennedy administration it was 1964.”
Chris: “Now you have the government, because of the stimulus, becoming a market participant, that’s another dynamic we have to deal with which is pretty significant.”
Howard: “Some of the things right now that we’re seeing in the market make no sense, its obvious because that’s where some of the hot money that’s out there has flowed, its flowed into equities its flowed into the bond market its flowed into the debt market but you know the orgy of debt that is going on at the federal level at the state level , I mean some of the states including the one that you’re sitting in and that I live in part of the time, its an insane number that cannot be managed.”
Chris: “So it sounds like your saying there was a time in our history, because it was before my time, that balancing a budget wasn’t considered fiscal conservatism, it was simply called being rational”
Howard: “Sanity, it was called sanity. We went into the early 1950s with an enormous federal debt as a result of World War II, but we paid it down during the Eisenhower and Kennedy years.”
Chris: “There’s a saying Howard, that democracies are prone to spending themselves out of existence, because the very reason we are talking about now, government spending and handouts and people voting themselves handouts that essentially spend itself out of existence.”
Howard: “Yeah, there’s never been a time in history over the last 5,000 years that I am aware of where every government on earth was participating in a race to the bottom, who can devalue their currency the fastest, they’re all fiat currencies none of them have any reality, and its a race to the bottom. And it’s what you just said, Chris, it’s one of my favorite sayings back from President Regan when he was in office was “When you rob Peter to pay Paul, you can absolutely count on the vote of Paul.”
Chris: “That’s right, and that’s happening all over the place isn’t it? Forgiving college debt, benefits for immigrants that are undocumented right?”
Howard: “It’s in the circuses all over again, the Romans tried this in 400 a.d. and it didn’t work out too well for them either.”
Chris: “Do you think people don’t realize that history repeats itself? Or should we just erase history therefore, we don’t have to know, we’ll just repeat it?”
Howard: “Well its been said that those who do not understand their history will definitely repeat it. I forget who it was that said this but he said you know, history doesn’t exactly repeat itself, but it rhymes”
And What About China in the Gold Market?
Chris: “China’s been buying up the worlds gold, most people aren’t paying any attention to it because they are sneaky and they probably want to overtake the United States as far as the reserve currency and I wouldn’t if they got a plan to back it by gold what’s your opinion?”
Howard: “I have exactly the same opinion, China tends to play a long game, they tend to think in terms of decades or centuries rather than quarter by quarter earnings statements, they’ve been touting themselves as the worlds largest gold producer for the last 10 years, every ounce of gold is produced in China is sold to their central bank by law, and they’ve had the open market buying hold with some of the plot of dollars they’ve taken in, so I think its very much apart of their long-term plan.”
Christopher Marston Ends the Interview saying, “You picked a good word to end this thing on “winner.” Were in a good market for what Nevada Comstock is doing, you guys are an amazing team, it’s been amazing with both you and your partner, I think everybody can tell from this show, you have a lot going on up there, you’ve been in this space a long time, the market conditions, the patented mining claims and what that gives you is an advantage relative to peers, your poised to be a winner, that’s our bet, and we are right behind you.”
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