Category Archives: CSE Issuer Stories

Irving Resources: Steady progress on gold projects in Japan serving investors in this explorer well

When the Canadian Securities Exchange featured Irving Resources (CSE:IRV) in its quarterly magazine two years ago, the company had assembled a portfolio of attractive projects in Japan and done some early groundwork.

At the time, President and Chief Executive Officer Akiko Levinson and director (and chief geologist on Irving’s projects) Quinton Hennigh spoke of a commitment to exploring methodically and at a measured pace. It was as if they knew they had something special. No need to rush.

Fast-forward to the first quarter of 2019 and their thesis is proving right. With samples up to 480 grams per ton gold and 9,660 grams per ton silver, permits in hand and targets ready for drill-testing, progress to date shows that not only are there excellent projects in Japan, but that exploration can indeed be conducted in an efficient manner.

The market clearly agrees, having boosted Irving’s share price in the past two years by over 100%. This increase in valuation is even more impressive given that many precious metals exploration companies have seen their share prices implode during that period.

Public Entrepreneur spoke with Levinson and Hennigh in February 2019 to get the latest on achievements to date and what investors can look forward to over the balance of the year.

Why did you choose Japan as the focus for Irving’s exploration work? What initially attracted you and why is Japan a good place to explore?

AL: The idea of exploring in Japan began making sense when Quinton and I went there in 2012 and visited the Hishikari mine, which is one of the richest gold mines in the world.  Quinton said, “Look, there can’t be just one of these.” So, we started looking for a way of exploring in the country ourselves. That opportunity came in 2015.

QH: Japan has not had any exploration conducted for perhaps 30 years.  The last major discovery was the Hishikari mine Akiko just mentioned.

Japan has been perceived as a country that is difficult to explore in, but when we looked into it we found the situation to be the opposite.  Japan is actually quite straightforward to explore in, and now here we are, looking for the country’s next high-grade gold deposit.

Talk to us about the regulatory environment. What is the permitting process like? How does it differ from that in countries such as Canada or the US?

QH: I would say that the regulatory framework is actually not all that different from in Canada, the US or Australia.  It is fairly predictable in terms of the expectations placed on companies. It is straightforward to get permits and so forth.

I think the biggest challenge was that some of the people overseeing the permitting process had not really encountered much in the way of mineral exploration for many years, so there was somewhat of a learning curve as they worked on our permits because they simply were not familiar with some of the processes involved. But I think we are past that now and the whole structure is working quite well.

AL: When we started this three years ago, this was new to everybody – to METI (Ministry of Economy, Trade and Industry), to Irving, and to the people who help move us through the permitting process.

But Quinton says all the time that there really are no surprises.  It is very predictable if you go through the process and if you do it diligently.  I think that because of Irving and others who are trying to do similar work in Japan, the regulatory system has a better understanding of this process. It is becoming faster.

Japan is a highly seismic area – explain how this influences the types of deposits found in the country and how it influences your exploration strategy.

QH: The seismic activity is related to the fact that Japan sits on the Ring of Fire. It is part of the Circum-Pacific Belt associated with volcanism and earthquakes as the plates collide.  You have the Oceanic Plate under the Pacific Ocean, and the Continental Plates. In this case you have the Eurasian Plate. As those two converge, you generate quite a bit of magma down deep that then rises to the surface and can produce volcanoes – there are numerous volcanoes up and down the Japanese archipelago. That volcanism is actually what leads to the formation of a lot of these gold deposits. The heat associated with the process is very near surface and heats the groundwaters. Those waters carry minerals, including gold, and redeposit them as they come to surface and emerge as hot springs.

Japan is well endowed with this environment – there are hot springs from one end to the other. This has been the case for many millions of years. So, Japan has seen a long history of hot spring formation, and we are looking for paleo hot springs – basically old hot springs that would have carried gold up to surface.

As a result, deposits in Japan are relatively shallow. Usually when you find an old hot spring, at surface what you see is a terrace of silica, a silica sinter. It is kind of a flat body of silica deposited by the hot springs. From the feeder below, cracks in the ground fed the hot spring water through, and that’s where the gold forms. These deposits are present within a couple of hundred meters of the surface.

We’re interested to know about your top projects and why you chose them as the focus of your exploration.

QH: The Omu Project is in northern Hokkaido.  Omu is centered on a volcanic system that was active about 12 million years ago.  We have a history on the property of not only volcanism but extensive hot springs.  There are at least three major centers where hot spring waters have surfaced. One of them is at the Omui mine, which is an historic mine that produced maybe a ton of gold in the 1920s.  It was very high grade and has seen little, if any, exploration since.

The second area we are focused on is the Omu sinter.  This is a new discovery that we made a few kilometers due north of the Omui mine. The system is intact, basically preserved in its entirety. The silica sinter is on top and we believe there is potential to find high-grade veins underneath like we see at the Omui mine. It has never been drilled or tested and is thus a brand new exploration target.

The third area is in the western part of the Omu property.  It is called Hokuryu. Like Omui, it is an historic mine and produced a few tons of gold. It was shut down during the Second World War, well before its resources were mined out. We are a little deeper into the system, as the sinter has weathered away – we are down into the vein system beneath it. There are pieces of vein at surface with an average grade of 50 grams per ton gold and 500 grams per ton silver. It is a very rich and promising new target.

I love the story you told once about finding a project after noticing interesting rocks in a local garden. Can you each share with us a favorite story about your exploration work in Japan?

AL: Those rocks were actually being used at a kindergarten in an ornamental fence.  Our team went to the school and asked where they’d found them. They guided us to the location and that is how we located the sinter.  The town wanted to get rid of the rocks because they planned to build something else. They put up a poster saying, “Anyone who wants these, please take them.”  We said, ”Yes, we’ll take them!” And now some of them are in our office. They were just going to throw them away.

QH: I usually judge geologists by comparing what they talk about to what you see in the field.  In other words, if they say, “This is the biggest thing since Ben Hur,” and then you get into the field and it’s disappointing, you know they embellish.  Then there are geologists who are low key. They’ll say, “Oh, there is something kind of interesting,” but then you get out in the field and it’s the biggest thing ever.

One of our advisors is a gentleman by the name of Hidetoshi Takaoka.  Two years ago, we went to Sado Island to visit a historic mine. The mine has a tourist shop in front with a box of rocks you can buy as souvenirs.  I picked one up and Mr. Takaoka said, “We can find one better than that. There is a creek near the mine and pieces of ore have washed down the hill over the years.”  We crawled down this steep valley just in front of the mine, and after about five minutes at the creek, Mr. Takaoka reaches down and picks a rock out. We crack it open and it is literally full of gold.  I knew then that he tends to understate things. It is one of the nicest specimens of epithermal vein I have ever seen.

You have tremendous partners in Japan. Tell us about them and how they have contributed to your success.

AL: How Irving started was that Quinton and I worked for a company called Gold Canyon and that merged with another company. What was left in Gold Canyon was a joint venture in Africa with the Japanese government mineral agency called JOGMEC. We worked in Africa with Mitsui Mineral Development Engineering Co. (MINDECO). They are probably the top engineers in Japan for mining and exploration. We had already worked together for about 10 years, and when Quinton and I asked MINDECO engineers if they could help us if we did work in Japan, they said they’d assist in any way they could. It has been amazing to have a built-in team from the beginning that is likely the best in Japan.

And previously Quinton mentioned Hidetoshi Takaoka. He is the one who recommended we look into the Omu project. He was chief geologist for Sumitomo Metal Mining and found the Pogo mine in Alaska for Sumitomo.

If Irving puts projects into production, your plan is not to build a mill or facility onsite yourself, but rather to supply smelters, is that correct?

QH: The rock is rich in silica, and silica is needed by smelters as an agent called flux.  Flux is added to copper, zinc or other concentrates and it helps retain heat in the furnace – it acts as an insulator to keep heat in the molten material.  It also extracts some of the nastier elements – it takes out iron and other things. So, silica is very important to the smelting process.

In Japan, they use perhaps a couple of million tons per year. Traditionally, Japanese gold mines have supplied the sinter for smelters, but as gold mines have diminished in Japan, this has become less and less so.

When the ore is added to the furnace as flux, gold and silver come straight out into the copper matte, and they recover them through further refining in the smelter – they are a byproduct of the smelting process.

We thus saw a huge opportunity.  If we find a high-grade deposit we feel it is easy for us to integrate into the smelter flux market in Japan. It saves us from building a mill, which is capital intensive and requires more permitting.

AL: When Omui was in production they shipped ore to the Kosaka smelter back in the 1920s.  Kosaka remains a large smelter today in full operation. When we spoke to them two years ago, they said that if we were to make a discovery they would welcome our supply.

You have a busy 2019 planned – tell us about the first half of the year and how it sets up the activity in the second half.

QH: For this year, we are working on getting our drill program lined up in Omu. We brought a drill rig from Canada and a drilling company we worked with in the past is seeking visas for some of its drillers.  Once we get those, we can start drilling, I suspect some time in March. The drill program should last most of the year, say from March to October. We will probably test the Omu sinter first and the Omui mine second.

We are also going to conduct trenching and bulk sampling at the Omui mine site. We plan to open up some of the veins with excavators and not only study the geology but extract a bulk sample, say up to 1,500 tons.  The plan is to ship the material to the Kushikino mine and smelting complex in Kyushu. They are prepared to handle our material and we are planning on selling it to them directly.

Other than that, our focus will be earlier-stage exploration on Hokuryu, which is on the Omu property, and we are also going to undertake greenfield prospecting and mapping on our other projects in Hokkaido.

Is there anything we have missed?

QH: We are one of a handful of exploration companies that have waded into Japan recently, but I would put us at the head of the pack because we have very good relations with the entire Japanese mining community – government, the mining companies, regulators, the towns.  We built this company purely to operate in Japan. We have a good Japanese team. I think we are in the best position to make a discovery in Japan.

This story was originally published at www.proactiveinvestors.com on March 3, 2019 and featured in the Public Entrepreneur magazine.

Learn more about Irving Resources at https://www.irvresources.com/.

Delrey Metals: CEO Morgan Good is bullish on materials supporting innovation in energy storage, EVs and the steel of tomorrow

Delrey Metals Corp. (CSE:DLRY) is a growing mineral exploration company powered by a focus on battery metals.

It has acquired the Star, Porcher, Blackie and Peneece vanadium properties in British Columbia and intends to review and acquire other projects showing potential for materials used in strengthening alloys for steel and titanium, as well as energy storage and electric vehicles.

Last year, the company completed Phase 1 work at the Sunset property in British Columbia, which showed a significant new cobalt, copper and zinc anomaly. Delrey has an option agreement to purchase a 100% interest in the highly prospective property.

On the heels of raising $1.5 million in Delrey’s October IPO, chief executive officer Morgan Good is excited about the company’s prospects. Public Entrepreneur caught up with him and got his take on mining, finance and commodity prices.

How did you get into the corporate world?

I was born into a stock brokerage family. Several of my relatives were floor traders, brokers, promoters or financiers. Growing up, I played competitive golf at Point Grey Golf & Country Club in Vancouver, where those relatives and other supporters gave me a deep understanding of money and the stock market. As a teenager, I had a serious interest in finance and venture capital.

What are your company’s most important projects?

All of Delrey’s current projects are important, particularly our recently acquired vanadium- focused assets. Of those, the Porcher and Blackie properties have unique features that jump out. We’re initiating geophysical work and airborne magnetic surveys on all four of the vanadium projects and are keen to see Phase 1 results. From there, we’ll be in a much better position to decide next steps. I think it’s worth mentioning that we are in advanced stages of making a strategic acquisition that could add significant value to the Delrey story.

Delrey’s Sunset project is near the Whistler Blackcomb ski resort. Do you ever have time for outdoor activities such as skiing or hiking?

When I travel for business, which is quite frequent, I like to try and enjoy activities that are consistent with the parts of the world I’m in. Being born, raised and currently living in Vancouver, skiing and snowmobiling are two outdoor Whistler activities I enjoy. But I do like warmer locales near a beach or desert.

This isn’t your first job as a CEO. What was your previous gig like?

I was previously CEO of ALQ Gold Corp., now ‘Ignite International Brands Ltd.’, a company focusing on cannabis-related investments. Dan Bilzerian, the celebrity poker player, is now CEO and Chairman after we assisted in launching his global cannabis brand, Ignite. My complete focus is now on Delrey.

You founded Patriot Capital in 2013 to invest in public and private companies. What were the highlights of that?

Patriot is my private firm that invests directly in every entity I attach my name to, thereby aligning my personal investments with my professional efforts. Patriot also takes positions in several other, primarily public companies and has profited in many areas. Included are mining resources in the Yukon Territory and British Columbia’s Golden Triangle, as well as notable cannabis plays, which, as you know, have boasted monumental returns for investors.

What was it like going through Delrey’s IPO? Your company raised $1.5 million in October, right?

Creating Delrey and conducting its IPO was a great experience. We’re fortunate to have been able to work with an incredible management team, legal team and, of course, our sponsoring brokerage firm: Leede Jones Gable Inc. It assisted very closely in our launch. I have to give a lot of credit to the Canadian Securities Exchange and British Columbia Securities Commission for making the journey efficient, informative and educational. Delrey closed on $1.5 million last fall and began trading October 24.

How much cash does Delrey have on hand? How long is it funded based on the current burn rate? Any other big fundraisings on tap?

Currently Delrey has about $1.4 million in the treasury. Our initial commitments technically and corporately are minimal as we roll out Phase 1 on our British Columbia vanadium assets. Once we make our next major move, you’ll see the capital requirements increase and at that time we’ll make the necessary plans for further financing.

Vanadium prices have dropped since an impressive spike upward last year. What’s your outlook for that market?

What goes straight up must come down, as the price of vanadium proved. It was a healthy correction, and the price has since consolidated and started moving back up. We believe the outlook for the commodity in 2019 and beyond is more than positive and the market will continue to see bullish signs from the metal.

What can we expect from the battery metals industry in general?

We will see a lot more excitement in the future. A major catalyst is China’s new laws requiring more vanadium in steel alloys used in the country’s construction and infrastructure buildouts, which are mind-boggling in size. At Delrey, we believe vanadium redox batteries will jump from the current 1% to 2% of vanadium consumption and usage.

This story was featured in the Public Entrepreneur magazine.

Learn more about Delrey Metals at https://delreymetals.com/.

Nerds On Site: Clever solution for small business computing needs drives fast growth in highly fractured market

In today’s global connected environment, with laptops, servers, mobile devices, and other digital equipment collectively running millions of different software applications, in-house IT and network security work is no joke. A single IT professional cannot cover all aspects of this vast technological universe and be up to date on every topic, as things change every day.

In recent years, network intrusion, ransomware attacks and other black-hat activity has reached such proportions that it’s no longer random bad luck when it hits someone. Internet vulnerability is day-to-day reality for companies of all sizes.

If you work at a large company, you’re in luck relatively speaking, as there is likely in-house help to lean on if you have an issue.

For small companies, however, external support is often the only place to turn. There goes the rest of the day, for starters.

Nerds On Site (CSE:NERD) is a practical solution for small and medium-sized enterprises to consider. The company has a large team of carefully chosen technology specialists ready to visit your home or place of work to diagnose problems on the spot and offer ongoing managed solutions to prevent problems occurring in the first place.

Oftentimes, a fix will be at hand and the team member will be able to find and implement solutions before leaving. If software, parts, or a security installation is required, Nerds On Site works closely with suppliers to get things fast and at fair prices.

When it comes to software, Nerds On Site also has the ability to develop unique, state-of-the-art solutions through third-party developers. Examples include electronic records processing and security applications. It’s kind of like having your own IT department without needing to be a large company.

Eugene Konaryev is a director at Nerds On Site and did much of the necessary financial work leading up to the listing of the company on the Canadian Securities Exchange in late November. Sporting a computer science degree from the University of Toronto, he immediately understood Nerds On Site’s capabilities and the concept of addressing its large market when he first met CEO (Capability Expansion Orchestrator) Charlie Regan in 2014.

“What the company does is mobile IT services to small and medium-sized business,” says Konaryev. “We still have a small portion of residential customers, but what we really do is enable SMEs to enjoy high-quality IT service and support without the need for high-priced contracts.”

It is not just hardware and software the company helps with, mind you. Once hired, Nerds On Site provides round the clock network and device monitoring options, on-site and remote support, IT asset management and much more. “We take care of pretty much everything there is in SME IT,” says Konaryev.

Nerds On Site was founded in 1996 and has established a solid presence in 10 major cities across Canada. One way to explain its scale is to refer to the number of Nerds in the network. At present, there are 125, the largest concentration being in Ontario, and specifically Toronto.

Clients include a large number of Canadian Tire locations, with a broader corporate relationship in the works.  Importantly, Nerds on Site has also been named an Apple mobility partner.

When entering a new city, the game plan is to have at least five Nerds, and preferably 10. For example, the planned expansion into 10 US cities entails 100 Nerds – 10 in each city. The company uses a subcontractor model and is starting to use franchising as well in the United States.

“When you enter a new urban market, a sophisticated Nerd force makes a difference,” says Konaryev. “Talent is very important. They call one another ‘enterprise nerds’ in a positive way.” He explains that set-up expenses for the company when it enters a new urban market are around $250,000 for a 10-person team, a pittance compared to almost any other type of business with 10 highly motivated employees serving an entire city.

Underlying the growth opportunity for Nerds On Site is that it operates in a highly fragmented market with the majority of companies in the space being small and short-lived, according to Konaryev. The big IT service companies focus on large enterprises and charge such high fees to their well-heeled corporate clients that catering to the SME market does not make sense for them.

Even though the SME market is largely there for the taking, no company has established itself as the segment leader on a national scale, although there are good local and regional players both in the US and Canada. Nerds On Site sees them as potential M&A opportunities.

“When someone asks who our biggest competitor is, I can’t even give them a name,” says Konaryev. “There are small IT shops in cities and often when you need help, there is nobody available to answer the phone, or you call and they have gone out of business.  That’s why this is such a great opportunity.”

The strategy for the coming year involves an aggressive rollout into the 10 fastest-growing cities in the US, most of them in Arizona and Florida. The plan is to launch in the first 10 US cities in 12-16 months.

“We have the capital to launch Nerdmobiles in these cities thanks to the funds raised during the IPO,” says Konaryev. “And then it’s all about finding talent, and fortunately, talent is in abundance if you know where to look. For example, we did a small campaign about six weeks ago to attract prospective Nerds in Florida and in one week we received over 400 applications.”

The follow-on expansion phase is slated at 50 cities, after which would come a 100-city expansion, the ultimate goal being to offer national coverage in the US. Continued expansion in Canada is also part of the plan.

When it comes to choosing Nerds, applicants need not only IT education and appropriate practical experience, but also the self-starter attitude that all successful entrepreneurs possess. The initial telephone interview has a pass rate of only about 50%, with those making the first cut moving on to a video interview, and then an interview in person with a local team leader.

Qualified applicants get about a month of training at Nerds on Site headquarters in London, Ontario. For US Nerds, training would take place on site in Florida.

Typically, for every 10 applicants, only one or two make it through the process. Once qualified, Nerds get access to competitively priced lease or buy options for a Nerdmobile, a network of other Nerds that is always there to help, a local customer database, low-cost inventory, and any other support they might need from the broader Nerds on Site team.

“We promote a collegial network where knowledge is shared and if someone does not know something, they can reach out to a colleague through IAAN (the company’s ‘I am A Nerd’ tablet-based control system), and the helper can share in the revenue because of their contribution,” Konaryev says.

Nerds On Site raised $4.7 million through its IPO.  Revenue in fiscal 2017 was around $8.3 million. Fees related to the listing are weighing on earnings, but the company would have been profitable had those one-time fees not been incurred, says Konaryev. The 10-city US rollout will use a significant portion of the capital but once that is complete Konaryev says the company anticipates being in the black.

Konaryev recalls that when Charlie Regan joined the company and the team considered how best to scale, they called as many IT specialists as they could identify and found that 80% did not answer. “From our experience, about 95% of SMEs are massively underserviced,” says Konaryev. Slowly but surely, Nerds On Site seeks to make this a problem of the past.

This story was originally published at www.proactiveinvestors.com on January 30, 2019 and featured in the Public Entrepreneur magazine.

Learn more about Nerds On Site at https://www.nerdsonsite.com/.

VirtualArmour International: Keeping the bad guys at bay with customized network security solutions

Every week, it seems, brings another concerning story about hackers infiltrating a commercial or government network and making off with highly sensitive information.  One would think that with the threat having been clear for so long, entities with significant exposure would have devoted appropriate resources to figuring out how to protect themselves properly. Alas, all too often this seems not to be the case.

VirtualArmour International (CSE:VAI) has a solution to this problem, or to put it more accurately, a tailored solution that precisely fits each customer’s risk profile and particular set of network vulnerabilities. Boasting a 100% retention rate across a very broad customer base, the company is obviously doing something right.

Public Entrepreneur spoke recently with VirtualArmour chief executive officer Russ Armbrust about the state of cybersecurity and what his company does to help organizations stay ahead of the curve.

Cyberattacks make the news regularly and the loss of confidence a compromised company suffers can be quite serious. Can you give us your view on the state both of attempts to infiltrate corporate and other networks, and the quality and consistency of efforts being made to counter them?

There are constantly new tactics and techniques being developed to compromise IT assets for valuable information. Considering these tactics are continuously evolving, we make it a point to partner with what we consider the best-in-class technology providers who have proven track records of constantly improving their solutions to stay ahead of this evolution.

The response landscape of cyberattacks has shifted to a proactive approach, looking for behaviour-based activity as opposed to the signature-based approach. Utilizing emerging technologies like artificial intelligence to maintain a proactive stance against hackers will continue to improve and aid in keeping pace with the way we respond to these threats.

As far as the quality and consistency of counterefforts, I would say that 90% of companies are very immature at this right now. That is the reason for the growth of our company. Most of the companies we talk to don’t know what they don’t know. It is a comprehensive process with each of the companies to get them up to the cyber posture they need.

Let’s look several years down the road – what do you project as far as the evolution of network security is concerned?

The traditional model of network security is being challenged and new technologies are becoming commonplace. Everything soon will be connected to the Internet in some way or another, be it wireless, cellular, Bluetooth or something new. We see that each and every day in commercial advertisements. Now your refrigerator is connected, your oven is connected. With nearly everything expected to be connected, this will produce new attack vectors and require constant development of defense mechanisms and techniques, both proactive and reactive.

Walk us through VirtualArmour’s approach to the problem.  What are your competitive advantages – what makes you better? And how does the company keep pace with the constantly changing cybersecurity landscape?

We focus on customer experience. Everyone’s cyber posture is unique, so our goal is to understand the potential cyber gaps of each customer.  We focus on becoming a true partnership and acting as an extension of their team. In today’s world, the new modern MSSP (Managed Security Service Provider) should help a customer solve problems, not just send alerts. And that is our true differentiator.

As to how we keep pace, we believe that we have hired some of the best engineers in the business. With such a broad range of customers in so many industries, as well as interacting with our customers’ highly skilled engineers, it enables our engineers to constantly evaluate and stay on top of this ever-changing cyber landscape.

Where do you find the majority of cyberattacks are coming from? Are they just people seeing if they can penetrate networks for the challenge of it, or is it cybercriminals seeing if they can enter networks to obtain information and use that to generate profit in some way? Who is who in the zoo out there attacking these networks?

It is all across the board. We see attacks coming from the outside to gather information, and we see attacks coming from inside of corporations. It is literally all across the board in terms of how people are trying to penetrate networks.

What types of companies choose VirtualArmour to protect them?

They don’t necessarily come from any specific industry, but they do have common traits. They typically are highly regulated and lack the proper resources or skillset to deliver what is required on any security practice.

We have customers in health care, retail, financial, oil and gas, mining and many others. With the customer service we provide we have been able to maintain a 100% retention rate to date with our customer base. And what is really exciting about that is our typical contract ranges anywhere from one to three years.

Our business is built solely around services. Professional services are helping with architecture and projects. And then managed services is where we are the eyes and ears to a company’s network and security. We are monitoring 24/7. We are not just alerting but we are helping with a customer’s entire network.

Where you do stand right now in terms of revenue and what is the outlook?

As of our reported results for Q2 2018, our managed and professional services increased 78% to a record US$1.2 million versus the same year-ago quarter, and total revenue increased 50% to a record US$4 million. And with our current growth, we are well on track to continue at this tremendous pace.

Looking at our margins, you can see our business continues to grow and a favorable shift to our higher margin, managed and professional services business.

Are there any industry dynamics people are unaware of right now that you think have the potential to drive more business to VirtualArmour in the long term?

Cybercrime is expected to hit US$6 trillion annually by 2021.  Due to these numbers they are also expecting cybersecurity jobs to more than triple. This talent pool will remain flat, which is going to create a shortage of talent and make it more difficult for customers to maintain their existing talent. And that will drive customers to sign with companies like VirtualArmour to deliver on all these services.

And to wrap things up, how about some client feedback or observations from your team on making sure the companies you serve want to continue working with VirtualArmour. What’s the secret there?

I’d point out that we typically come across the same competitors when we compete for an opportunity. What’s really been exciting for us is that we have been coming out on top and it is due to the customer service experience.

When we win a new client, I always like to ask them why they chose VirtualArmour and we get the same answer over and over. We truly do take a different approach. We are more customer-focused. We provide playbooks around their business needs rather than telling them they have to do things a certain way. When they meet our engineers during the sales cycle, they come to believe they are some of the best in the business and that makes them comfortable about the services they are going to receive.

This story was originally published at proactiveinvestors.com on January 3, 2019 and featured in the Public Entrepreneur magazine.

Learn more about VirtualArmour International at https://www.virtualarmour.com/.

NameSilo Technologies: Achieving superior investment returns requires looking where others do not

Mention the name Paul Andreola in Canadian financial circles and those in the know require no further explanation, given his outstanding track record as a stock picker in non-resource microcaps. Taking the methodology that has served him so well as a private investor, Andreola has painstakingly created a portfolio of investments in small companies for NameSilo Technologies (CSE:URL) (note: NameSilo Technologies began trading under its current name and symbol on December 6, 2018. The company previously traded as Brisio Innovations).

NameSilo shares have more than doubled in value over the past year and Andreola credits this in part to a shift in strategy that will see the company take larger percentage positions in its portfolio holdings going forward. Diversification that sees everything from drug research to truss manufacturing included in the portfolio is a big help as well.

The other key to delivering strong returns to shareholders is a fascinating private-public arbitrage concept that requires experience and a broad, deep network to achieve.

Andreola shared the NameSilo approach to generating superior investment returns with Public Entrepreneur during a mid-November discussion in Vancouver.

NameSilo Technologies has some similarities to a classic investment fund, but plenty of differences as well. Can you explain the NameSilo concept and business model to get us started?

The company is run by investors first and foremost. We use a model we think is quite rare, especially in the microcap space. We look for companies that are more advanced than pure start-ups. Companies that we think have significantly less risk than the typical business entity that gets listed publicly but with as much, if not more, upside. We are looking for situations that have that perfect risk-reward scenario that allows us to feel comfortable putting in a significant amount of money. We take a private equity model and put it inside a public vehicle.

We are looking for high-growth companies. We want to invest in companies that have proven there is a viable model and, in most cases, viable products and services that they are offering. And we want to catch them just as they are getting that explosive, hockey stick-style growth.

The model itself is something that we have been doing personally for years, and we have now put it into a vehicle such that we can take advantage of the scale that goes with being a public company.

Tell us about the boss. Who is Paul Andreola and what led you to build NameSilo?

I have worn a lot of hats over the many years I have been at this. I used to be a stockbroker and spent roughly 10 years in the investment industry. I have seen a lot of deals and most of them are not good. The key is to try to say “No” as many times as you can and find that one little gem that comes along every now and then.

I’ve also started two technology companies. One we took public and it did extremely well, and then the other one actually did not do so well. And we learned as much from that one as we did from the one that was successful. So, I’ve got the start-up and the go-public experience and that helps us when we look at new opportunities.

Thirdly, I have an investment newsletter and a network of investors who all have the same mentality. We all want to find these little gems that are obscure and undiscovered. And we want to try to bring these companies everything they need to be successful. It’s a model that we have proven works.

My other director is Colin Bowkett. He comes from a much purer venture capital background and has been in the markets for over 10 years. Compared to me he was a lot more involved in the speculative side of the business and is more of a people person than I am. The thing about investing is there are a lot of personalities involved and having someone with good people skills enables you to figure things out that you wouldn’t have been able to without the right skills.

The third key person is Kristaps Ronka. He is an IT specialist who has worked for several tech companies, but his real claim to fame is that he and his partner started a tech company from scratch and took it from zero in sales to a run rate of around $100 million before it got bought out. He took some of the funds from his sale and has invested in a collection of other businesses.

The NameSilo website states that there are lots of good investment opportunities, but NameSilo is looking for great ones. What makes a great investment opportunity?

We take a GARP approach – Growth at a Reasonable Price. There are a lot of cases where you find a great company but it is priced for perfection, and that is not what we are looking for. We are trying to find situations where there is a great company at a great price. And we don’t just look at the public markets. We have managed to find several high-growth, low-priced public companies and have done it on the private side, too. That is where it gets really exciting because we think there is a very strong pricing arbitrage where you can find a company that might sell privately for 3 or 4 times earnings and the public comparables trade at 10 or 15 times earnings, so immediately there is a lift just by taking these companies public.

How do you find these companies?

We turn over a lot of rocks and are constantly looking. As far as public companies, we are numbers guys and we read every single SEDAR filing in Canada. There are very few companies we haven’t got at least a cursory understanding of. We have a formula we are looking for and if a company doesn’t meet that formula it gets crossed off.  We literally go through thousands of them – to find even one you have to go through a lot.

The private ones are a little bit harder to find. We have a network of people who know what we are looking for and typically the network brings us private deals to assess. A lot of them are companies not necessarily looking for money, but they may be looking for an exit. Great little businesses, run well, not necessarily needing money, so we don’t have the risk of financing them, but they just want a partial exit or something. We take them public and achieve that partial exit for them.

Let’s look at your portfolio and how a company fits into the greater whole and creates value for shareholders. Perhaps begin with the latest acquisition, which also brought the company a new name.

NameSilo is actually an anomaly. Until now, all of the companies we became involved with, we took no more than a high single-digit percentage ownership position. We’d find companies where in the process of going public we had the opportunity to purchase shares and then when it went public we would get that lift on our 5% or so.

NameSilo is a company we have actually purchased 100% of, though we have carved out a percentage for the management team running it. But here is an opportunity where we think we are going to get 100% of the lift through that private-to-pubic arbitrage. That is likely to be the way we will perform going forward, taking a much larger stake in each company.

NameSilo’s stock price has been doing well of late. It has doubled since the beginning of the year. What is driving that and what feedback do you get from shareholders?

The biggest driver is the biggest part of our portfolio, which is NameSilo. We think it is outstanding. NameSilo is a domain registrar similar to GoDaddy or Tucows, but it is arguably one of the three fastest growing in the world. The company has been able to automate itself to be able to drive prices down to where nobody can compete on price with our core product. We are growing much faster than GoDaddy on a percentage basis.

We think we bought it extremely cheap in comparison to the other publicly listed companies. We trade at a fraction of the metrics they trade at and we are growing anywhere between 80% and 90% organically, whereas GoDaddy is growing at about 15%. What is driving the NameSilo share price, I believe, is that people are beginning to recognize the undervalued nature of our major asset.

Investing involves looking into the future and making certain assumptions. What do you see around the corner in some of the industries your companies are involved in?

We are always looking for trends but not trends as you typically see in the venture capital market. We want to see established trends. We didn’t invest in the cannabis space. We didn’t invest in the blockchain space. We want to see trends that actually show up in financials.

For example, one of our investments is a company called ImmunoPrecise. They’re a contract research organization for major pharmaceutical companies. What that means is major pharma companies don’t do a lot of the R&D in house but will contract it out to a company such as ImmunoPrecise. That is a major tailwind that a lot of people don’t recognize but that we are seeing in the numbers. We want to see high growth in the businesses we are investing in, because that is a sign the business is working.

The other major trend to be aware of is the topic of passive versus active investing. The FAANG stocks – Facebook and Amazon and those names – there is a massive amount of money going into opportunities that have to be big enough for institutional funds to participate. The old active investor has given way to investing in ETFs or big funds that mirror the indexes or just buy a basket of the biggest stocks.

I think we will see the pendulum swing back to the active investor who is a good stock picker. In the microcap space, liquidity has dried up and institutions have gone upmarket. In the long run what that does is open up a lot more opportunities for investors like me to go after these great little deals without the competition you would usually see. It also opens up a lot of opportunities for bigger companies to buy the smaller companies on the cheap.

Any words of advice for up and coming entrepreneurs from your years in the business?

The model that we have in Canada in the public markets really is second to none. As entrepreneurs, people should be aware that this tool is there for them. Especially if you have some degree of success. If you have a real business that is generating revenue, and in some cases profits, the ability to take advantage of the model here and some of the valuations you ultimately get, and the options that being public give you, is something entrepreneurs should seriously look at.

This story was originally published at www.proactiveinvestors.com on January 2, 2019 and featured in the Public Entrepreneur magazine.

Learn more about NameSilo Technologies at http://brisio.com/namesilo-technologies-corp/.

Peekaboo Beans: Vancouver-based childrenswear maker aims to create clothing that’s both practical and profitable

For Traci Costa, Chief Executive Officer of Peekaboo Beans (CSE:BEAN), her childrenswear company began as a labour of love – in her basement with her 2-year-old daughter, Cailin, surrounded by toys.

Fast forward to today? It’s a high-stakes business with a strong sales force of brand ambassadors, also known as “Social Stylists”, and strong growth potential on the back of a shift in retail sales as millennials start to flex their fiscal muscles. Keep in mind, this audience spent US$200 billion last year, relying heavily on social media and influencers.

“There’s a generation gap that’s happening right now with millennials — millennial parents shop differently,” says Costa. “If you’re not on social media, you’re missing out.”

As a company, Peekaboo Beans has had long-standing power, pivoting in multiple market situations.

“This was about creating a brand through the eyes of a child,” says Costa, adding that when she started the firm in 2006, her goal was to design and create a functional apparel brand that was practical, fashionable and enabled children to live and play in comfort and style.

She saw a gap in the market and felt strongly that there had to be a better alternative to childrenswear that was out there.

Background in fashion? No. Background in entrepreneurship? Limited. But Costa had a vision.

“I wanted to change the way that we look at apparel for kids,” says Costa. “It was really about everything that a parent wants, and everything that a child loves in their clothing.”

Today, the original mission remains the same, however its business opportunity has shifted.

The global children’s apparel industry remains in transition mode; in the US alone, it’s currently estimated to be worth US$31.6 billion, despite excessive discounting and a slowdown in China.

Peekaboo Beans aims to continue to raise the bar: its business opportunity is designed for parents on their own terms and own schedule, which is key for busy parents.

The company has over 600 Social Stylists that offer customers personalized service through personal shopping, or online through social media platforms, such as Facebook and Instagram.

Around 75% of these brand ambassadors are located in western Canada, primarily British Columbia and Alberta, with 20% in eastern Canada, mostly Ontario and the Maritimes.

In addition, the company now has some 2,000 paid members who receive perks like free shipping and preferred pricing for an annual fee of $49.  Many of these “beanaholics” are also involved in marketing efforts through a program that awards points to use for product credit when they refer friends, write reviews, or share Peekaboo Beans photos on social media. Some actually used to fall into the Social Stylists category but transitioned to the new membership program when it was launched in October.

One market that continues to bloom is Peekaboo Beans’ US contingent: around 5% at the moment, but with potential to expand further in the future.

We have grown our Stylist base all across North America, starting in Canada, and are further establishing the brand in 34 states this year,” says Costa.

“Our Stylists are predominantly mothers, working, stay at home, with entrepreneurial aspirations.  They have one to four children, they’re educated, and they make buying decisions that are values-aligned.”

That demographic is key to the new strategy.  According to Fung Global Retail, bricks and mortar retail stores continue to struggle: in 2017, 7,000 stores closed, which is triple the previous year.

It’s a sobering statistic, indeed. But for Costa, it has given her the opportunity to pivot from getting her childrenswear in brick and mortar stores to a model that appears to have more staying power and potential.

Her most challenging time, she said, was in 2008, on the back of the recession when the company was operating as a retail model selling to local boutiques and stores.

“We had to adjust and pivot,” says Costa. “And we did.  We found a new model.”

Costa decided to steer Peekaboo Beans in a new direction, away from selling in retail stores to a more unified sales force, through a direct sales model.

As successful as that model’s been, Costa is determined to stay on the leading edge of market, technological and demographic change. To keep out in front, Peekaboo Beans recently transitioned the direct sales platform to an omni-channel approach, one that engages sellers through social platforms, including Instagram and Facebook, as well as other retail channels to maximize revenue and build brand loyalty.

“We’re moving it into a social selling platform where we can leverage technology and grow through an influencer base, social media and blogging — similar to an affiliate model,” says Costa.

Costa says the company is focused on growth on all levels, with a particular emphasis on expanding the US segment of its business, alongside launching an Amazon store very soon.  Temporary “pop up” shops have also proven to be successful.

With increased operational efficiencies, better margins and a new recurring revenue model, “we expect to see profitability within the next 12 months with this new platform,” says Costa, adding she hopes to add another 500 affiliates in the United States this year.

The US expansion plan will use a multi-faceted approach and the list of to-do’s is long: creating an e-commerce and wholesale strategy with a focus on certain markets, continuing to develop its social media strategy, attending more industry events, and increasing content with social media influencers.

“We’re building a social impact movement with the people that sell our product,” says Costa, adding that the company places a focus on partnering with manufacturers who have standards that align with its values: no harmful chemicals and toxins.

The year 2019 stands to be a good one for the company, as it will continue to transition from a direct sales model to a social retail platform.

“This model will allow our Social Stylists to shop, save and earn commission through sharing the brand on social media,” says Costa.

For now, Costa continues to push Peekaboo Beans’ forward with her goal to establish the company as an industry leader and category king in children’s apparel.

This story was originally published at proactiveinvestors.com on January 2, 2019 and featured in the Public Entrepreneur magazine.

Learn more about Peekaboo Beans at https://shopca.peekaboobeans.com/.

Developing sustainable projects for the next generation of mining exploration

Participants:

Anne Turner, Executive Director, Yukon Mining Alliance

James Rogers, President and Director, Global UAV Technologies; President and Director, Longford Exploration Services

Angela Johnson, Corporate Social Responsibility, SSR Mining

Shauntese Constantinoff, Senior External Project Relations Advisor, New Gold

To the outside eye, mining is often seen as an ossified industry, with visions of backhoes digging and drills turning.

But that’s not the whole picture. And the picture is evolving quickly thanks to millennials.

There are a host of millennials behind the scenes influencing change: enabling the industry to be more efficient and sustainable, alongside working with local Indigenous communities.

Public Entrepreneur spoke to four millennials who are part of the wave of change.

To register for an exclusive CSE Talks session at PDAC 2019 featuring the new faces of mining, click here: https://www.eventbrite.ca/e/cse-talks-new-faces-of-mining-tickets-57041685216

How is new technology changing modes of work in both exploration and development?

JR: What we’re seeing is a trend towards safer, more efficient data collection. In particular, new technologies are being fostered by large corporations that have health and safety protocols that are far more robust than, say, a junior miner.  I think that’s driving a lot of the technology and where it’s going. That’s not just about reducing cost but also reducing working hours in the field, such as data collection in inclement environments. Risk management is definitely one of the biggest drivers.

AJ: I think one of the biggest things I’ve seen in exploration is increased efficiency. So, even on our drills, the drill foreman has his iPad, and data that used to be captured on pen and paper in the field is now all streamlined and bluetoothed in real time.

AT: Low-impact technology, like droning, is critical, especially for early stage. If you’re in these areas and you’re not really sure what’s happening, it’s great to use low-impact tech and get that initial assessment. At the more advanced stage, you’re starting to see things like directional gyro-drilling, where you are able to send the gyroscope down the drill and get instant readings. This kind of tech is useful but costly. The tech is there. But it’s not always in the budget.

For people considering getting into the mining industry, what career opportunities are there? What are the best growth sectors from an employment perspective?

AJ: If I was to give anyone advice, I would say data analytics. I think that’s becoming huge in the mining industry as far as re-targeting, or looking at data for exploration projects, compiling data, or looking at data in a new way. That’s a new and exciting field.

JR: I agree that data analytics and data management are huge. Lessening impact is also important.  When you consider coming into the industry, think about how you’re going to reduce the impact of your work. The use of drones is just one example.

AT: I think our industry needs to do a better job of communicating the benefits of working in the industry in our day-to-day lives and in our communities. We’re not communicating all the benefits of this new tech and safety. There’s a lot of room for people in social media, corporate social responsibility (CSR) and relationship-building. Anyone that can build a strong relationship will be able to have a strong hold in this industry.

SC: The opportunities in this industry are many, enabling people to provide for their families and support their communities in a substantial way. Communicating these opportunities and benefits is key.

Further to that, resource exploration and development must take into account local communities, such as First Nations, and any impact it may have. How do we do a better job of communicating the benefits from an employment perspective?

SC: I would say get out into the communities, hold information sessions, etc. so that people not only understand the impacts, but the many benefits as well.

As an example, we helped facilitate an Indigenous-led Training and Employment Strategy with several of the local First Nation communities near the project I work on to get everyone better prepared for future opportunities and start to identify and address any barriers to employment.

AT: I think what you’re doing from a company perspective is incredible. We’re working on an initiative that will launch this spring, to go into communities to host a mining day. We’re also working to get mining-related curriculum into schools as well. Connecting with that age group of 5-18 is really important.

We’re also trying to work really closely with politicians and influencers. When you talk about it to media, about green technology and clean jobs, there’s this sentiment that mining doesn’t have that. The fact is you’re not getting clean tech without mining, as you need these minerals to come from safe, regulated parts of the world to truly have clean industries and products – like electric cars. Lastly, one of the things we forget to communicate is if you want to stay and work in or near your community, mining is going to be an option for high-paying, rewarding, growth careers.

SC: Having a local workforce, at the end of the day, in their own territories, can benefit an entire community. It is crucial to start learning about the communities and what is important to them at an early stage. It’s a good idea to find out where people’s skill levels are, having transferable skills is important too in a finite industry, and the potential to work with and train in local Indigenous communities could be one of the biggest assets for a project.

So where’s the gap?

JR: I feel like the biggest gap is the juniors, because they are jumping on and off of projects and there’s a short period of engagement. Or they go test the water with a 1000-meter drill program and expect to come back the next year with a fully funded drill program but it doesn’t happen.

How can we mitigate that? Sometimes these projects just aren’t feasible. Even if a junior is responsible and tries to engage the community, there is just a general fickle nature of the finance community around resources and the ability to advance a project.

AJ: On that point, that’s the challenge that we face as explorers, is that social chain of custody. We’re all told, engage early, engage often, continue engagement even when you’re not exploring. But it boils down to funds. This is a real challenge and it’s a real debate and topic we have to tackle in the industry.

I do think it’s getting more noticed. We’re talking about it far more.

What haven’t we talked about?

AJ: One thing I find interesting is governance, in terms of what investors are asking us to disclose. That’s a huge part of something that is changing, right as we speak. ESG, or governance scores, are becoming increasingly important for investors. Investors are now calling companies, asking about disclosures: from climate change to human rights policies. They’re asking for that. I had no idea a few years ago that this would become so important and is an evolving piece of the industry.

AT: One of the initiatives we just launched is Virtual Yukon, which is a virtual reality tour of the Yukon. We’re using it both as a CSR and engagement education tool as well as an investor tool. We’re going to be taking drones over most of the major communities and you’ll be able to visit different places. You can see some of the individual mining projects and companies can use it. We will also use it in the communities. Overall, using digital tools will be a huge asset to companies, investors and communities.

To register for an exclusive CSE Talks session at PDAC 2019 featuring the new faces of mining, click here: https://www.eventbrite.ca/e/cse-talks-new-faces-of-mining-tickets-57041685216

The new faces of mining: engaging the millennial investor in mining opportunities

Participants:

Andrew Nelson, CPA, Mining Investment Analyst, Dundee Goodman Merchant Partners

Jamie Keech, Founder & CEO, Ivaldi Venture Capital

Sean Kingsley, Vice President, Corporate Development, Cabral Gold

They’re young. They’re powerful. And that wave of power is growing – quickly.

Meet the millennial investor. Now, the catch: getting them interested in investing in the mining and metals industry. It’s a relatively untapped investor demographic, on the back of a tough half-decade in the space.

But the potential for opportunity is growing, and this group of investors is demanding more of the industry: from more connectivity to increased transparency (and beyond).

Public Entrepreneur spoke to three up-and-coming millennials who are helping push the space forward.

To register for an exclusive CSE Talks session at PDAC 2019 featuring the new faces of mining, click here: https://www.eventbrite.ca/e/cse-talks-new-faces-of-mining-tickets-57041685216

Tell me a bit about your background. How did you get involved in the mining industry?

AN: I began my professional career as a financial auditor while simultaneously completing the Chartered Professional Accountant designation. Later, I transitioned to investment banking, joining Dundee Securities, which recently became Dundee Goodman Merchant Partners, a mining-focused merchant bank. The clientele and deals I’ve been involved with have always exclusively been mining.

JK: I’m a mining engineer. I’ve worked in a variety of places: Albania, Hong Kong, Mongolia, Baffin Island and have had a lot of different jobs on the technical side. In Vancouver, I worked primarily with a small management team that built a company that is called Equinox Gold. I left about a year ago to start my own venture: it’s called Ivaldi Venture Capital. We also run an investment research service called Resource Insider. We’re focused on deploying capital into mining and metals projects. We’ve done several deals over the last year, ranging between $1 million to $3 million.

SK: My family has lived in Vancouver for over 125 years – we are one of the oldest Chinese families here so being a part of a legacy has always driven my interests into building something long-lasting. There’s nothing more constant than the need for minerals in the world. I’ve been hooked in the industry for over 12 years and plan to be for as long as I live. I currently do corporate communications and development for two Brazilian-focused junior companies.

We’ve moved from a landscape dominated by resource exploration/development companies to one that now includes a major cannabis presence and increasing prominence of tech stories.  How do you look at this new environment and what appear to be the challenges?

JK: When it comes to mining, younger investors haven’t really had the chance to come into the space. I’m a millennial and during the last bull market, I was 24. I didn’t have any money to spend and most 24-year-olds are in that same situation. There hasn’t been much interest in mining since that time because there hasn’t been much opportunity to be interested. That money has gone to the cannabis space, the crypto space: these are industries that millennials are able to relate to very easily because people smoke cannabis and people grew up on the Internet.

AN: What’s going to get millennials interested in mining is a broad commodity bull market in the resource space. Most millennials aren’t familiar with the wealth creation the resource space can offer and have recently been attracted to high flying sectors such as cannabis, cryptocurrency, and blockchain, until the financial hangover set in.

A recent resource example were the parabolic moves in lithium and cobalt which was due to the electric vehicle trend. This was very engaging for millennials who can understand Tesla and lithium-ion batteries in their cellphones. Many of my friends who are not resource professionals would be talking about these commodities as a reaction to the rising share prices and they wanted a piece of the action.

SK: Alternative companies and sectors outside of mining have done well to get their stories and opportunities out to a new wave of investors, millennials. Ten years ago, you wouldn’t see my generation investing in stocks yet now they all have brokerage accounts.

It’s now up to us as an industry to capture their attention through avenues that they could relate to and not just the stories of how the industry titans like mining billionaires Robert Friedland and Ross Beatty got their investors and themselves very rich. We need to teach millennials that mining is the most constant sector and has tremendous upside and applications through avenues such as video, virtual reality, social campaigns, and telling stories that would resonate and engage their curiosity and understanding of the resource sector. It is time for our industry to innovate, rejuvenate and disrupt how it once was.

Gold and silver have long been a primary focus for investors in the mining space but new market segments, such as battery metals, have the potential to attract a different type of investor. What do you think about this?

JK: I think it’s happened. The energy metals sector, be it lithium, cobalt, vanadium, has done a very admirable job of piggybacking on the tech industry. Elon Musk has inadvertently become one of the most successful mining promoters in history. There’s been a demand and companies have done an impressive job of tying their product into something people care about, as compared to mining.

SK: There is money to be made in these new segments. I’ll take us back to 2006-2008 when the craze in the sector was rare earth metals. Unfortunately, China came in and flooded the market with supply and that quickly stopped the demand, but the run-up saw investors making money. Come 2011, it was all about graphite and graphene. Again, the market got flooded but investors made money. Here we are, now comes energy metals: cobalt, lithium, vanadium. Yes, these battery metals are desperately needed as we revolutionize the way we live and do things and investors will make money, but these run-ups are not constant like precious metals gold and silver.

AN: From a market observation, most battery metals such as lithium and cobalt are very small markets, each approximately sub-US$10 billion relative to gold and copper, which are around US$100 billion-plus. It doesn’t take much capital to move these smaller markets and those are trades that you need to get in and get out of within a 12 to 24 month timeframe. A lot of those companies are speculation, rather than investments. The point is, if you want to speculate in these small markets, make sure you have impeccable timing.

What is the entry point to getting a millennial investor to begin researching a mining stock? How do you get them interested in the first place and what feedback have you had from this generation of investors?

JK: I think about this a lot. In other industries there are influencers. It’s not a coincidence that Kylie Jenner’s makeup company is a billion-dollar company. It has nothing to do with the quality of the product, it has to do with her persona. There are not a lot of young influencers within the mining industry. There are a few people my age (30s) and there are a lot of people in their 60s.

There’s a gap and I think we need more public-facing influencers – letter writers, CEOs, leaders in the industry of any type that can generate interest – and that will bring them into the industry. That said, influencers have to get the timing right. If there’s not money to be made, no one is going to care.

When I think about mining, there’s an adventure aspect to it: there’s travel to exotic locations and we know millennials are the best-travelled generation yet. This is an aspect that can engage people and enable them to see the potential in the space. That’s what’s going to bring investors in. It’s a multi-step process. You need an interesting story, you need the potential to make money, and you need public facing personas that people trust.

SK: For me, it’s got to be about the tremendous upside in value creation and I often point to the discovery phase of the Lassonde Curve chart which outlines the life of mining companies beginning at exploration and ending in production, showing value that the market attributes to each stage.

Once millennials really start to understand that everything in the world is only possible with the minerals that we discover and mine and of what opportunities that creates for our generation will they realize the endless possibilities and upside potential of the sector.

AN: There’s a massive opportunity here to shift the way millennials look at investing in mining. Millennials are now the largest generation in Canada, but are the least invested in stocks, but are the most likely to participate in an online financing. Recently, I received a shell opportunity in my inbox.  I passed but another millennial I know subscribed. To partake only required 5 minutes and was a very simple process. The company raised 324% over their targeted funding and brought in 201 investors in a matter of six days. This is one of the major platforms I believe will be used to complete resource financings with millennial investors.

To register for an exclusive CSE Talks session at PDAC 2019 featuring the new faces of mining, click here: https://www.eventbrite.ca/e/cse-talks-new-faces-of-mining-tickets-57041685216

Gabriella’s Kitchen: Healthy foods and cannabis-infused products take wellness to a whole new level

When you first meet Margot Micallef, chief executive officer and co-founder of Gabriella’s Kitchen (CSE:GABY), her authenticity shines through: her firm handshake, her warm smile and her clear words.

It shines through particularly strongly when she talks about her sister: Gabriella, the namesake of Gabriella’s Kitchen. Although Gabriella passed away after a battle with cancer, she remains the company’s inspiration.

The pure-play cannabis wellness company has come a long way since creating its original award-winning skinnypasta, a high-protein, low-calorie and low-carbohydrate fresh pasta. Other product lines have been added to the shelf: noodi, gabbypasta and most recently alto, which includes the company’s cannabis-infused products. Today, the vertically integrated, branded, consumer products company focuses on utilizing cannabis for the lifestyle consumer.

Not to mention the benefit of having Micallef at the helm. Her resume is impressive, to say the least: a lawyer and philanthropist, founder of Oliver Capital Partners and a former Senior VP at Shaw Communications.

Public Entrepreneur spoke to Micallef about Gabriella’s Kitchen’s origins, its new line of cannabis products and global expansion plans, and how the company is seeking to change the conversation around cannabis health and wellness products.

Q. Can you give us some background about how Gabriella’s Kitchen started?
My sister, Gabriella, and I decided to move to a healthier lifestyle and identified a derth of products in the market, primarily around food, that supported a healthy lifestyle. We saw the business opportunity. As we were launching our business, my sister was diagnosed with stage IV lung cancer.

The diagnosis really brought home the need to change our lifestyle and focus on our health and well-being that was within our control. Her doctors couldn’t do anything for her and they told her that. The pasta line was inspired by the dietary restrictions Gabriella faced throughout her cancer journey.

The beauty of what we did was that we were able to prolong her life for five years.  She had great quality of life and really learned to value the foundation of health and wellness through diet and lifestyle.

Q. I don’t think many people realize the effort it takes to get a product on the shelf.  Can you walk us through it?
It’s tough. In order to get your product on the shelf you have to dislodge somebody else’s product.  That’s something most people don’t understand. We knew going in we were going to make amazing products, that there was a demand for these products and we were going to get them to market.  But it’s a lot more work and a lot more money and takes a lot longer than anybody thinks it’s going to.

We started it in a little retail location in Toronto — we moved to Toronto from Calgary because that was the biggest market in Canada.  We’d make the product in the back and sell it out the front. At 3:00 pm each day, Gabriella would close up and go pound the pavement — and slowly and surely, we got more retailers.  We got up to around 200 when she passed away in 2011. I ended up taking over the business in 2015. I’ve invested about $5 million and raised another $19 million to date.

Q. What have you used the funds for and walk us through how you leverage the infrastructure you have in place?
We’ve used that money primarily for product development and to build out our team and infrastructure.

That’s our differentiator.  With our strong infrastructure, we can move into any channel we want to, including the licensed cannabis channel.  We came upon the cannabis space about a year ago when we examined the healthful properties of cannabis.

In many ways, our approach was opposite that of many other companies, which have an idea, raise the money and then build the infrastructure.  We already have the infrastructure and the team with the knowhow to get the product on our shelf. Our existing business line has more than 30 unique products that cater to health-conscious consumers, whether they shop in the mainstream shopping channels or in the licensed cannabis retail channels.

Leveraging our existing infrastructure means we can move product into a channel much more rapidly than anyone else can.

Q: Talk about the cannabis space and what kind of consumers you’re looking for.
Our goal is to serve consumers wherever, however, and whenever they want to consume cannabis wellness products – and that means in the mainstream channel or in the licensed cannabis retail channel.

We’re looking at a diverse range of products as vehicles to assist them in their chosen modality for consumption.  We already know that the mainstream market is going to start carrying CBD-infused products in a big way. I believe that once federal legislation in the US changes, there will start to be a move afoot to get all cannabis infused products into mainstream channels.  We will be ready for that opportunity.

Consumers are changing their perspective on health and are looking for new ways to supplement or replace traditional medicine.

Q. Can you talk about how your team continues to be built out?
We’ve got a whole research and development department.  One to note is Mara Gordon, who is a pioneer in the cannabis space and our chief research officer. She has amassed a database of formulations and health attributes associated with the cannabis plant that she has garnered from her own experience in working with physicians, clinicians, researchers and patients over the last 10 years.

We also continue to build out our expertise in the cannabis channel, having just hired a VP sales-licensed channel and acquired Sonoma Pacific, a licensed cannabis distribution company in California.

We also have a business development team that is scouring North America for brands that we want to bring under our umbrella. We want to grow through acquisition as well as through innovation.

Q. What does your next year or two look like?
We want to be the category leader in the cannabis wellness space. Not “one of” the leaders, rather, “the” leader. We know that the category leader takes 70% of the economics off the table. We want to be the one that everybody else wants to chase.

We want to do that for two reasons. One is that we believe that when the federal landscape changes in the US and the big players move into the market, we think that they will look for acquisitions that will move the dial for them.

We believe that if we can build a significant platform in North America that we can then partner with a global player and benefit consumers in a much broader way and, of course, benefit our investors.

This story was originally published at www.proactiveinvestors.com on December 4, 2018 and featured in the Public Entrepreneur magazine.

Learn more about Gabriella’s Kitchen at https://gabriellas-kitchen.com/ and on the CSE website at https://thecse.com/en/listings/diversified-industries/gabriellas-kitchen-inc.

The CSE Year In Review

It is clear from speaking with people both inside the Canadian Securities Exchange and around the broader financial community that 2018 is going to be remembered as perhaps the most transformational year in the CSE’s history.

Huge financings, billion-dollar market caps, a steady stream of international listings, and financial institutions investing in CSE issuers like never before are only some of the talking points. Fast-growing, well-capitalized companies and strong investor interest in them have elevated the exchange to a new level.

Total capital raised by CSE issuers looks set to increase by over 500% compared to 2017, with a chance at topping the $5 billion mark.  Curaleaf Holdings certainly played its part, raising $520 million during its listing transaction in October. The company stated in a related news release that over 100 financial institutions had supported its financing.

Rapid expansion of market capitalization
“Clearly, standout events have been taking place over the last few months, with the number of very large US-based cannabis issuers that have joined the exchange,” remarks Richard Carleton, CSE Chief Executive Officer, during a discussion in late November. “We are seeing the most rapid expansion of market capitalization and impact on the exchange since our inception.”

Climbing 13.25% year-to-date, the total market capitalization of CSE listed is growing appreciably thanks to the contributions of several larger entrants to the marketplace. And while Curaleaf leads the way with its $2+ billion valuation, there are plenty of other issuers that qualify as solid mid-caps in the Canadian market. Microcaps still constitute the majority of listings, but bigger companies are finding the exchange to be a suitable home as well.

It’s no secret that the CSE is the go-to exchange for listing cannabis companies with operations in the United States. The CSE never shied away from the cannabis industry in Canada, and when considering how to manage prospective issuers from south of the border, exchange officials spent time with regulators and professional services providers to confirm there was a high degree of comfort with the industry’s risk profile. One of the advantages of investing in public companies, after all, is strict disclosure standards designed to ensure that investment risk can be accurately assessed.

The next development in the cannabis sector at the CSE, beyond more large listings almost ready to debut, is the development of cannabis index products in 2019. “The CSE is the only location globally where you see as heavy a concentration of US cannabis issuers, so we are the logical place for such an index to be calculated and disseminated,” notes Carleton. Could related ETFs be far behind?

Whilst cannabis stocks may be dominating the headlines, the CSE has also welcomed a strong contingent of new mining companies in 2018, a total of 57 through the end of November.

“We have in fact seen a significant number – and in absolute numbers almost a record – of mining companies get onto the exchange and receive funding this year,” says Carleton. “My sense is that some of the profits from trading in the cannabis space over the last couple of years are being applied to the mining sector.”

Tech listings have been increasing as well, even though appetite for everything blockchain has slowed compared to the enthusiasm of late 2017. Interestingly, the industry enthusiasm for cannabis might just dovetail with ongoing international outreach initiatives by the CSE to put new funding alternatives on the table in the tech space.

Canadian public equity markets a viable alternative for
US companies

Smaller companies in the US and other international markets are finding it increasingly difficult to obtain private funding as private equity funds increase in size and need to make larger investments in portfolio components. A primary Canadian listing on the CSE would be worth considering for many young growth companies.

“We are being exposed to advisors in the United States who are beginning to understand that the Canadian public equity markets are in fact a viable alternative for US companies looking for growth capital,” says Carleton. “We’ve had conversations with a number of these professionals about taking what we have learned from the capitalization efforts in the US cannabis space and applying that to companies from other sectors that perhaps have not been that well served by the venture capital and provide equity models that are the principal source of growth capital for early stage US companies.”

Speaking of tech, the CSE has an ongoing project of its own in the form of a blockchain-enabled clearing and settlement facility. The project team is in the late stages of quality assurance and plans call for moving to external testing with dealers and other interested parties before the end of 2018.

“Dealers continue to be extremely eager to get their hands on it,” Carleton explains. “They understand the business case and the client service benefits, as well as the number of companies that would like to use security tokens as a means of securing capital.  We continue to be very excited about this facility and it is going to be one of the things on the agenda for 2019.”

Continually working to improve the issuer experience is an important part of the CSE’s culture, and that’s reflected in exchange staff organizing or participating in over 80 events during 2018.

New Toronto office
The CSE seeks to make that part of its business even stronger in 2019 with relocation to a new office, the highest office floor in Toronto, no less – 72 stories up at First Canadian Place. “This was really brought on by the anticipated growth in our staffing levels, particularly in the listings regulation area,” says Carleton. “It is important that we continue to maintain high service levels for our issuers and deploy our regulatory responsibilities as an exchange.”

A full-blown market opening centre is in the works and it will be just one of several first-day activities designed to ensure that a new issuer’s launch into the public markets gets off to a good start. “The new First Canadian Place location will provide the space and a spectacular backdrop to have exactly that kind of experience.”

New issuers will be pleased to learn that they are joining an exchange that again set full-year records for trading volume, trading value, and other measures of investor participation.

Trading volume up
In the first 11 months of the year, trading volume was already 54.97% higher than the total for all of 2017, topping 27.05Bn shares. Most measures of investor activity had actually surpassed last year’s record levels by mid-summer. And with the listing application pipeline exceptionally healthy as we head into year-end, look for 2019 to be another blockbuster.

Granted, capital markets in Canada are having a better year in general, but the CSE’s pace of growth in 2018 is validation of a business model that puts the needs of issuers first.  Fund managers from around the world confirm this, sophisticated management teams who choose the CSE over multiple alternatives confirm this, and investors trading tens of millions of shares per day in individual companies confirm this.

Carleton and his team see it first-hand and fully anticipate 2019 to be another year of growth and progress in many forms. Be it cannabis and tech businesses listing from the US, Israeli companies following up on the CSE’s multiyear effort there to introduce the listing concept, or new investors learning about the many opportunities presented by CSE issuers, the outlook could hardly be brighter.

“Things are going well but we need to keep our foot on the accelerator,” Carleton concludes. “Top-quality service for our issuers, a fair and well-regulated trading environment, and continued innovation in the exchange’s technology and business practices. It has worked so far, and we are going to keep at it.”

This story was originally published at www.proactiveinvestors.com on December 31, 2018 and featured in The Public Entrepreneur magazine.

Learn more about the Canadian Securities Exchange at https://www.thecse.com/.