We’re Still Early in This Mining Boom (Stephen Gorenstein)

Executive Summary

Stephen Gorenstein described how he built the ARI Resources Fund’s investment process after moving from geology to sell-side research, corporate M&A, and fund management. The process combines a top-down view of commodity supply and demand with detailed company-level research, strict position sizing, and a preference for assets that can perform even if management execution is imperfect.

His central market thesis is that a multi-year mining boom is still in its early stages. He believes governments and companies are increasingly focused on securing mineral supply chains, while that shift is not yet fully reflected in mining-company valuations.

Fund Strategy and Portfolio Construction

• Start with commodity fundamentals, then select companies. Gorenstein said a good company can struggle if its commodity lacks investor demand. The fund therefore assesses the commodity outlook before conducting bottom-up company research.
• Portfolio mix at the time of the interview: more than 40% gold, about 30% copper, and about 15% uranium.
  • For gold, the two indicators he emphasized were real interest rates and central-bank buying or selling.
  • He views copper as a long-duration supply story, supported by electrification and grid investment. He said he had seen no major copper discovery brought into production in more than 20 years and sees the potential for a shortage lasting 10–30 years.
  • He likes uranium over the nearer term but considers its supply constraint less durable than copper’s. He suggested the opportunity could last five years or more, while noting that supply is constrained partly by the difficulty of bringing production online.
• Avoid or limit commodities where supply looks abundant. The fund has minimal lithium exposure and avoids nickel. Gorenstein also described aluminum as largely an energy-cost story and expects more modest long-term growth in coking coal than during China’s urbanization boom.
• Reported performance: Gorenstein said that during roughly the first two years after taking over the fund, resources fell about 17%, while the fund gained 22–23% over the same period. These figures were reported in the interview.

Investment Process and Portfolio Framework

• “Fat head, long tail” portfolio structure
  • Core positions are generally around 2–2.5% of the fund; some may be about 5%.
  • Smaller “tail” positions can start at roughly 0.5% while the team completes its research. This lets the fund track a company without waiting through a multi-month diligence process that could coincide with a 30–50% share-price move.
  • The fund has a 10% position limit. Reaching that level prompts consideration of trimming, but Gorenstein said it is not an automatic sell rule. He prefers to let strong holdings run unless the investment case changes or valuation growth is significant.
• Three checks before a core position: assess the commodity, complete bottom-up company research, and use management meetings and the fund’s industry and advisory networks to check for overlooked risks. Research may also include financial modelling and site visits.
• “Management-protected” assets: A preferred project has shallow, continuous ore; room to grow; reasonable grade; and low discovery or operating complexity. The idea is to favor geology that is relatively forgiving of execution mistakes.
• Assess “quality with disclosure,” not grade alone. Compare grade with strip ratio, orebody geometry, continuity, and mineralogy. A lower-grade deposit with favorable mining characteristics may be more attractive than a higher-grade deposit with a difficult strip ratio or narrow, complex ore.
• Country-risk discipline: Gorenstein said past losses in some African jurisdictions shaped the fund’s approach. It generally favors countries where it has greater confidence, citing Côte d’Ivoire, Guinea, and Namibia, and limits exposure in higher-risk areas.

Company Examples Discussed

• Andina Copper: The fund was an early investor. Gorenstein highlighted the Quebrada discovery in Colombia as a potentially world-class, growing porphyry system, alongside earlier-stage projects in Argentina and Chile. He considered the company undervalued relative to its potential.
• Asara Resources (rendered inconsistently in the subtitles): Presented as a Guinea-focused gold opportunity with a growing, roughly 2-million-ounce orebody. Gorenstein favored its shallow, continuous oxide material and low strip characteristics, describing these as features that could make the asset less dependent on flawless management. He saw obtaining an operating permit as a potential catalyst.
• Many Peaks Minerals: The fund began with a small position after meeting the company around its acquisition of the Doropo project in Côte d’Ivoire, then conducted further research. Gorenstein expected a resource update and feasibility study. Based on recent drilling, he suggested the project could show more than 500,000 ounces. He also expected greater institutional interest and liquidity if investors responded to the studies.
• Predictive Discovery: The fund had returned to the stock and viewed a mining permit for the Bankan project in Guinea as a potential catalyst. Gorenstein said the company’s existing operations were generating cash and described Bankan as a possible next stage of growth.
• Red 5 / Vault and King of the Hills: The fund established a major position in 2023 when gold was about A$3,100 per ounce. It investigated the company’s production shortfalls, spoke with management, and concluded that the orebody remained attractive, partly because mining was moving into areas with more ounces per vertical metre. The holding went through several corporate transactions; Gorenstein said he liked the combined company’s district-scale optionality.
• Benz Mining: Gorenstein cited geological continuity and the company’s work to understand the mineral system before communicating it to the market. He acknowledged concerns about low-grade areas and said these remained part of the team’s work.
• Pantoro: The fund re-entered after previously selling when production targets began to be missed. Its renewed interest centered on the Racetrack development: the interview contrasted its roughly 3-metre widths with existing narrow zones of about 0.7–0.8 metres. The company’s updated mining plan, expected in December, was identified as a potential test of the turnaround case.
• FireFly Metals: Gorenstein liked its copper deposit, location, surrounding infrastructure, and exploration potential. He viewed nearby discoveries as evidence that the district could continue to grow, while emphasizing that the fund did not buy companies solely in anticipation of a takeover.

Broader Market Thesis

Gorenstein’s non-consensus view was that the sector remained early in a mining boom. He compared the current focus on strategic mineral supply with earlier periods when Japan and then China sought greater access to resources. In his view, renewed Western efforts to secure critical-mineral supply chains could support a multi-year investment cycle, but this was not yet fully reflected in mining equities.

Presenters and Sources

• Stephen Gorenstein, ARI Resources Fund manager and interview guest.
• Money of Mine podcast hosts. One host is addressed as Jared in the subtitles, while the other is not clearly identified.
• The episode also included a promotional segment for CrossBoundary Energy and named partners Sandvik Ground Support, Market Eye, SLR Consulting, and Titan Recruitment.