Good afternoon. My name is Douglas Silver. I'm a worker emeritus in the mining industry. I'm retired. Most people who know me know that I built one of the largest mineral royalty companies. And after I retired the second time, I realized that the founders of all of the major mineral royalty companies in the world are now retired, but they were still alive. So, I wanted to write a book where I captured their stories because we currently have over 30 public royalty companies. And whether you're a prospector learning how to create a royalty, or a mining company selling one, or an investor, I thought it would be really good to hear their stories about how they created wealth for their investors.
So, the book is very unique because nobody has ever written about the modern mineral royalty industry, even though we're one of the largest financing sources for mining companies. The industry went from 1986 where it had a market cap collectively of $42 million to now where it's roughly an $80 billion dollar industry. Somebody needed to capture all of this, and part of the book was to provide anybody remotely interested in mineral royalties with a background on how the business has evolved and more importantly, where it's going and how we're adapting.
In 2002, I saw that the Chinese super cycle was getting ready to kick in. I was approaching the ripe old age of 50 with kids needing to go to college, and I saw an opportunity to build a public company. At that time, I was a professional mineral appraiser, and I was contracted by one of the small royalty companies to value them.
In the middle of that, a takeover bid came in from one of the big companies, and they asked me if I could negotiate the sale of their company, which as a consultant, I of course said “yes.” And so that got me introduced to the royalty business. I absolutely loved the model because it's very scalable. Once you buy a royalty, you put it on a shelf, and you just collect coupons and get your revenues. You can do this with a very small staff. In my case, I like doing the deals and the work. So, I was able to actually run a company, do the deals, and then create value for our investors.
The purpose of the book was to explain how the mineral royalty business has evolved over the last 40 years. And I was really fortunate that I got each of the founders of the major companies to write their stories. If you read this book, what you're going to find is you're going to hear their voice. Their personalities are very much why they were successful. And by reading and hearing their voice, you can use these same skills in developing your own career.
I was so fortunate to get everybody to commit, and then I did a big overview of the entire industry to show you how the deals have changed, how the financials have changed. It's a really good book to have on your shelf if you're going to be involved in royalties at any level.
The industry is exciting on multiple levels. The first of all is that we're passive investors, so you get to participate in the mining industry, but you're not actually running and building the mines. The second thing is, of course, if you're a royalty holder and the mine runs over on capital, you don't have to put more money in. You still get your share. It's a very scalable business, so you can make a great deal of money, which is also very attractive.
Today, because of the crash of 2009, when the big banks pulled out of the mining industry, the private equity firms, the royalty industry, stepped in to provide mine finance. So, you get to be right at the cutting edge of the new mines and the future of metal production and all the good things that go with it. And it's very exciting playing at that level.
The Society of Mining Engineering [Society for Mining, Metallurgy and Exploration] provides an incredible opportunity for young people. I started my consulting company and I needed to network. I needed to get work to pay my mortgage and Society of Mining Engineering [Society for Mining, Metallurgy and Exploration] offers this. Whether you're participating in a booth or in my case, I would be involved in giving speeches or running sessions for SME.
Your exposure is measured in hundreds and thousands of people, and so it's exceptionally cost effective because you pay a registration fee or in the old days when you got to speak for free and you'd be exposed to 100 people that might need your services. Meanwhile, you're networking, you're meeting other people in your business-related fields that you might need if you want to expand your business. You get all of that in one society, and that's why SME is so powerful for young people.
My experience with mentoring is quite different from most people. Be aware that I was born and raised in New Jersey, not exactly a large mining state, and when I came into the mining industry, I had no experience. So, it was incredibly difficult for me to get my first job, it almost drove me out of the business because all the other graduate students and students had summer internships and experience.
What that did is set me on a path that I would prevent other people from having to go through that. And so, I've spent the last 30 plus years mentoring whenever the opportunity is because I'm well known enough in the business that I can open doors for students and for young people. And hopefully they won't go through the same bad experience that I went through.
In the mining industry, you need two skill sets and only two. One is you've got to be good at your technical skills. So, you need to take the right classes, you need to study hard and do well. The other equally important thing is you need to network. You should be networking. Even as an undergraduate student, get a business card. It may even say you're a student.
When you go to conferences, hand it out, start networking, getting to know people. If you give a business card out to somebody, it gives you the right to call them up later and say, “Remember we met, I gave you a card. Are you hiring?” or “I have a question about your business” or something.
It's a marvelous entry into the business world; because one of the problems that business has is that it is one of the most exciting industries. But how do you transition from being a student to being a working member of the industry? Conferences like SME’s and others are where you can meet everybody from all different scales and experience levels, but you need to make that connection. And I got to tell you, a business card is the most inexpensive way to start that process.