Eric Sprott's mining story

Sprott's journey to success in the financial industry began with a pivotal decision during his days as an accounting student. He borrowed $50,000

Sprott's journey to success in the financial industry began with a pivotal decision during his days as an accounting student. He borrowed $50,000 from his girlfriend's father, promising a 10 percent return on the investment within a year. This bold move kick-started his career as an investor, and his initial foray into the stock market proved highly successful, establishing his reputation as a shrewd financial mind.

Sprott's early days were marked by modesty, including the bank's cautious approach to his potential repayment. However, he persevered, repaid the loan, and steadily climbed the ladder in the finance industry.

After passing his accountancy exams in 1968, he embarked on his professional journey, first joining Merrill Lynch as an investment analyst and later contributing his expertise to Loewen Ondaatje McCutcheon's institutional sales team. In 1982, a significant milestone was achieved when he acquired a seat on the Toronto Stock Exchange, co-founding Sprott Securities with two colleagues. The firm specialized in institutional investments, consistently delivering profitable annual returns, and cementing Sprott's status as one of Bay Street's most astute investors.

Sprott's investment philosophy was both straightforward and effective: identify undervalued stocks or "multi-baggers" with substantial growth potential. In 1982, he launched Sprott Managed Accounts, achieving an astonishing annualized return of nearly 25 percent, outperforming the Toronto Stock Exchange's average of approximately 10 percent during the same period. An initial investment of $100,000 in Sprott Managed Accounts in 1982 had grown into an impressive $40 million, a testament to his skill in stock selection.

One of Sprott's distinguishing characteristics was his deep appreciation for physical assets, particularly gold bullion. He viewed gold as a safeguard against the uncertainties associated with paper investments and economic risks, considering it a tangible representation of real-world value in a world often driven by speculation.

Sprott Asset Management in the heart of Toronto exemplified his unwavering dedication. The office showcased his passion for art and culture while he remained actively involved in the firm's day-to-day operations, emphasizing the importance of meticulous stock selection.

In December 2001, Eric divested his ownership of Sprott Securities to concentrate solely on investment management. The Sprott Group of Companies evolved into one of Canada's largest hedge fund firms, managing assets exceeding $7.0 billion by December 31, 2013. Eric garnered numerous awards, including the MarHedge Annual Performance Award, Ernst & Young Entrepreneur of the Year, and Fund Manager of the Year.

In the early 2000s, Sprott achieved significant investment gains, not limited to the mining industry. Three notable examples include:

Bow Flex: Eric Sprott strategically acquired shares in Bow Flex, later transformed into Direct Focus, at approximately $1 per share. The stock's value eventually skyrocketed to around $30 per share, marking a remarkable thirtyfold increase in his portfolio's value.

Eldorado Gold: During a downturn in gold stocks around the year 2000, Sprott seized an opportunity by investing in Eldorado Gold, a prominent gold mining company. Acquiring about 10% of the company at multi-year lows, he made a highly profitable investment, even though he did not maintain his full 10% position.

Taser International: Another astute investment in Sprott's portfolio was Taser International, acquired at approximately $5 per share. Over time, the stock's value surged to approximately $120 per share, delivering an impressive twenty-fourfold increase in value to his investment portfolio.

Over the past decade, Sprott expanded his role as a private investor in the mining sector. One notable venture was with Crocodile Gold, a Canadian gold mining company that acquired the Fosterville Mine in Australia in 2012, ultimately becoming one of the world's most profitable gold mining enterprises.

In 2015, Crocodile Gold underwent a transformation, rebranding as Newmarket Gold under dynamic new leadership, with Eric Sprott actively participating as an investor. Recognizing the untapped potential within Newmarket Gold's assets, Sprott made substantial investments in the company and assembled a fresh management team, including Tony Makuch, who later assumed the role of CEO at Kirkland Gold.

In 2016, Newmarket Gold merged with Kirkland Lake Gold, a Canadian gold producer renowned for operational excellence. This merger gave rise to Kirkland Gold Ltd., an eminent mid-tier gold producer boasting a portfolio of high-caliber assets. Eric Sprott played a pivotal role in orchestrating this union, leveraging his significant shareholding in both entities to facilitate the consolidation.

Under Tony Makuch's guidance, Kirkland Gold emerged as one of the world's most accomplished gold producers, consistently surpassing production and cost expectations, accompanied by a remarkable surge in its stock price. When Sprott began taking profits on Kirkland Lake Gold, his position was valued at $800 million.

Subsequently, he reinvested the proceeds into numerous small junior mining companies, with a particular focus on the New Found Gold discovery and related projects. His introduction to New Found Gold came through Collin Kettell from Palisades Gold and Quinton Hennigh, a geologist and mining entrepreneur.

Impressed by the exceptional mineralization and the property's potential, Sprott initiated investments in New Found Gold in 2019, eventually becoming the company's largest shareholder. His financial support greatly accelerated the company's exploration efforts, resulting in significant discoveries such as the Keats Zone, home to some of Canada's highest-grade gold deposits.

Sprott remains highly optimistic about the Keats Zone's potential to become a world-class gold deposit and has expressed his willingness to further invest in New Found Gold to support the development of the Keats Zone into a producing mine.

One of Eric Sprott's fundamental principles in investing is to "PRESS THE BET." In his own words, "I probably have more stocks that I lose on than stocks I make on. I am always looking for stocks that can increase by ten times. I don't want a stock that only goes up two times in two years. I prefer ten, I'll take five, I'll take seven, I'll take three. But if you set your targets too low, you'll find that more things don't reach where you expect them to, so you may as well have a target that is lofty and challenging."