August 21, 2025
Mining investments demand more than quick guesses. They need a long view. Investors must have sharp intelligence and a clear grasp of both opportunities and risks. In this post, we explore the types of intelligence that can shape success. We also consider the role of royalties and the competitive realities investors face.
(scroll down to the video)
Who Has the Greatest Advantage?
Three possible leaders in mining intelligence:
- Human Intel – Ground-level insights from funding, management, and operational experience.
- Artificial & Computer Intel – Data-driven analysis, AI modeling, and automated pattern detection.
- Merged Intel – A blend of human skill with advanced computing for strategic decision-making.
Three Core Intel Categories
- Human – Funding, management, and leadership direction.
- Out-of-Managers – Evaluations based on standout performance or “WOW” factor.
- Inserted Intel – Human systems complemented by computer integration for improved efficiency.
Mining Requires a Long View
- Evaluation often involves Security Sec (SWAG), including outlier scenarios (e.g., Electrum-type deposits).
- Short-term strategies offer fewer trades but yield higher multiple gains.
- Ultimately, value rests on mine outcomes — production, sustainability, and profitability.
The Royalty Approach
Some companies don’t mine directly. Instead, they buy an overriding interest (percentage) in a miner’s net profits — known as royalties.
Advantages:
- Income without operating the mine.
- Potential for steady returns while avoiding direct mining risks.
Risks:
- Mines can fail, go bankrupt, or be nationalized.
- Loss of production = loss of royalty income.
- Competition exists among royalty companies for the best deals.
Example: Company #1 Royalties
- Roy A: 2% until 2029
- Roy B: 10% + 1% (market/sales) until 2029
- Roy C: 5% gross sales until 2029
Valuing Multiple Royalties
Rule of Thumb:
- 2.5% royalty ≈ ¼ of base valuation
- 5% royalty ≈ ½ of base valuation
- 10% royalty ≈ full base valuation
Calculations involve:
- Multiplying rates by base values.
- Considering term lengths and escalation.
- Adding across streams for total valuation.
Evaluating a Mining Company
Step 1 – Human Intel
- Background facts & figures
- Years in operation
- Resource estimates
Step 2 – Market Intel
- Last 6 months of price performance
- Market activity patterns
Step 3 – AI Intel
- Resource use identification
- Patent age and validity
Step 4 – Analysis & Projection
- Apply human-created protocols
- Set current trend
- Forecast future price or trend
Final Takeaway:
Success in mining royalties depends on blending different forms of intelligence. It also involves carefully valuing royalty streams. Additionally, understanding that even the most promising assets can face operational or political risks is crucial.
For now, from the glitter of the highest peaks to the hidden veins in the deepest mines,
Nick aka Denaliguide
Denaliguide Summit 
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