Perfect Recipe for Retiring Rich | Exclusive Interview with Rodrigo Barbosa (CEO, Aura Minerals)

People think that the banks are robbing them, actually, because the value of their currency is going down, which is not false.

You can measure all the produced gold in the world since early civilization in Olympic swimming pools.

I cannot speak for him.

Thank you, Bill, and thank you all for watching us, and thank you for all the compliments. It has been quite a journey, but in the last four or five years, with a very extraordinary team that we built, we've been achieving extraordinary results, as you mentioned. But life was not as easy all the time, right? You always have to dive through major situations in order to be in the positions where we are today. Right. So you mentioned about some experience that shaped me. I think maybe what I would share is not a specific situation, but I think what has given me a lot of learnings to apply to Aura and to make Aura where it is today is that since I finished, I came back to Brazil and I worked for a major Brazilian conglomerate that had business in road concessions, electricity power plants, electricity grids, cement, shipyard, to real estate, textile. I'm not sure if you heard about Havaianas flip-flops. So we also had that sports apparel with the flip-flops, which is a well-known brand in Europe and also in the US.

So it's a business in very different situations: business that we had 100% of control, business that was listed, business that we had partners that we were minority. So I could see many different sectors of the industries in many different areas of the cycle, timing of the cycles.

And I was always super curious, super curious about the root cause of anything that drives to success or failure, right? And it's not about the strategy by itself, right? It's about who is making those decisions. What kind of environment drives decisions for a company to succeed or to fail. I like to see that a company is a paper, right? There's no real company. What you have is a lot of people doing daily tasks and making decisions. And what will drive any company to succeed or not is what kind of daily decisions or daily tasks those people are making in order to succeed or not. So I learned a lot, like you mentioned, about people, but not only about people — governance, how you structure a place to make the most of them, how you give them a lot of opportunities for them to explore the maximum potential, and so on. So during that period, I learned that there's no specific sector, no specific strategy that is right, but if you build the right team with the right culture, you will end with success.

No, I think I had the privilege of having two important mentors in my life, right? Number one was my father. He also could drive his career into becoming a CEO of a major company in Brazil. And then his brother also could drive his career in order to become a CEO of a major bank in Brazil. Excellent. And they were not sharing a lot with me advice on what I should do with my life, right, but sharing their experience — what made them do the right decisions or the wrong decisions. And I would say most importantly, it's the values, the family values, the ethic values, and how you want to — it's not about what you want to conquer, but how. And long-term thinking pays off. It hurts sometimes. Short term, you have to be prepared to make a decision that might hurt the short term. But in the end of the day, if your heart is within the long term, things will happen for you to succeed. Of course, there's no secret. You have to study hard. You have to work super hard. But of course, thinking, sticking with your ethical values and making sure you don't open the long-term vision in the short term — you have to navigate.

Well, first thing in the morning, my mind is to see my daughters and take them to school and have some kind of conversation, play with them. So that's my priority during the mornings. Few other mornings, I also like to go to the gym and do exercise. But in the end of the day, you always start thinking about the business, right? There's no moment that you turn off and on, right? It's always back and forth. I like, you know, since the morning I try to see my whole day, all the meetings I have, and of course since before the day, but on the morning, what kind of outcomes do I want from each of the meetings? What kind of message do I want to transmit in each of the meetings? So that process that I always mentalize since my early career, right? Every single interaction you need to have some objective, right? And so mentalizing that is part of my daily process, and in the end it turns out to be working well.

Maybe I do it.

But that doesn't change anything. It's just, you know, it's not information that will drive any decision. It's just, like I said, information for fun.

I think all of us, in the end of the day, wants to have some impact and, of course, do a positive impact in whatever we do, right? I don't come from the mining sector, but the mining sector is where I found where I can have a very significant impact, a positive impact in the world. And why it's a small step — it's just what they're trying to do with Aura, because if you think about mining, it's probably the sector where you can have the most positive environmental and social impact. And why do I say so? Because all other industries, they choose where they want to go. So they are always located in very nice cities where they can hire good people and there's all full of infrastructure, schools, hospitals, and everything. In the mining industry, you don't choose. You have to go where the resource is. And normally in the world, those areas are the less assisted by governments, the less infrastructure areas. So if you think about the opportunity you can have if you do the right thing about raising the human standards, the human development in those areas, it's much more significant than the other industries. Of course, you need to do absolutely the right thing. You need to keep thinking constantly what kind of positive impact, what are the consequences of the decisions we are making over the environment and over the communities. So thinking about the next 10 to 15 years, I see myself continuing to work and to spend time in the mining industry, right? I probably won't be CEO of Aura in the next 10 to 15 years. I think things need to move. I'll always be connected, either as a board member or shareholder, but of course guiding the new team, giving good advice on how to strengthen even more Aura as a reference in the mining industry. Mining companies are going in the same direction. I think the mining sector is going through an inflection point on image, to have a very positive impact in the world, and together with the other companies, I feel that we can continue to build those kind of values also, right? I won't spend all my time in mining, and I'd like to also give advice to friends, give advice to other executives that are going through challenges. Myself, I specialize somehow in turnarounds and also invest in other sectors that can also have positive impact — not just to make money, but what can we leave — make money, of course, but what can we leave to the world as a better world. For example, I have a friend that initiated one company that I became a shareholder in and give good advice. It's a startup, but very ambitious. His idea is to digitalize Amazon with the real assets, with the land, and tokenize this and sell. And the use of proceeds of this token is to maintain the forest, get information on what is going on with the biome, and so on. So people now can be motivated to preserve Amazon in a financial way, not only having to receive money for free to keep it up.

I wouldn't say that's a cryptocurrency, but it would be a token that can be sold under the SEC rules. It has not been sold yet; it is in the area of a process of grouping of the asset, but it is moving forward now in a very speedy way. And we believe that perhaps next year you can already issue the new tokens, and the revenues of the tokens go to the owners of the land. Part goes to the owners of the land, part is for an impact fund that will invest to preserve Amazon in a capitalist way, to also have income from those investments.

No, I think Bitcoin is an interesting case. I like the case of Bitcoin. It has parallels to gold in terms of scarcity limitation. You cannot issue more gold; it is possible to produce much more than we are producing now. So there are interesting similarities and room for both. Of course, gold is way ahead of Bitcoin in terms of value. Gold is now $30 trillion; Bitcoin perhaps a little bit over a trillion. And Bitcoin — if you see the correlation of Bitcoin appreciation or depreciation since it was issued — is much more related to the high-tech companies' leverage rather than as a real asset. But I believe that down the road it might become more of a real asset. Take an example of this year, right? Where the world is thinking about the US dollar — will the US be able to pay all the debt or not? What happened with the Russian assets that were frozen? Why is China buying more and more gold? So gold appreciated much more than Bitcoin as a real asset. It doesn't mean that down the road Bitcoin will not change its dynamics more into a real asset.

Yeah, no, and I think everyone should read many books about Musk. The biography, you understand his life, but I think Liftoff is the best to understand his mindset, to understand his way of thinking and making decisions. Again, I like to understand what makes all those companies succeed. It's not that Elon Musk the person, but how he makes decisions. Maybe I can quote before I jump to Elon Musk: Einstein always said that imagination is way better than knowledge, because imagination you don't have a limit, and knowledge you are limited to the knowledge. And I think Elon Musk goes in this direction. His imagination is super creative; he thinks absolutely out of the box, not based on accumulated knowledge, but based on what can be done in the future in his mind. And so that is super interesting. And then it comes a few other aspects of him that I try to learn and to use: questioning dogmas. Okay, most of the people think, well, this happened in the last 10, 20 years, that's why everything succeeded, that's how you build a rocket, that's how it worked. And then he said, 'No, no, no. Maybe there is a different thing, a much better thing to do.' And then let's find it out, find it out together. So he pushed everybody not to replicate what was being done, but to build a new system, build a new way of building rockets that can be much cheaper, more efficient. And then you can apply this to every kind of industry. In mining, this is a very old industry, one of the first industries in the world, right? It's full of dogmas. Full of dogmas. And now people know me, or know that if someone comes to me and says, 'No, this is the way everybody's doing,' that's exactly the argument for me to say, 'So that's what we are not doing; we are doing different.' So that different, because it's full of opportunity to think differently, full of opportunity to find new ways and continue to build value to shareholders, to the environment, and for the communities.

Um, I think that we're super different from the traditionals. Doesn't mean that there aren't interesting companies in the same direction, right? We are not unique. There are a few others. I think, and you mentioned, I think the mining industry has accumulated over the decades a highly centralized decision-making process in corporate, and it's senior managers, and full of hierarchical levels, full of power signs, beautiful offices, nice cars, private jets, all of those things. And then when you centralize — because if you think about the centralization of decision-making process, if you are in an industry that doesn't change rapidly, which used to be mining — that's why probably mining is the last one that's being refreshed. You make a decision once per year, CEO can make, or let's plan next year with the senior managers, and then everybody executes on this. Right. It used to work the world like this because there were not many changes happening in the 70s or the 80s, but then came digitalization, technology, internet, and things start to change much faster. And there's no way I believe that CEOs, senior managers can make the right decisions for the company all the time. So you need to find a way to delegate those decisions, to build a very strong team on a daily basis at the mine operations, so they can — and give them autonomy to give them decision. And for you to build this environment of decision-making process, it takes a lot of time and timing because you need people to connect more, you need people to talk more to each other, because the CEO has a view of everything. Once you delegate more decisions, the managers or the local managers might not have the view of everything, but then you need to give them the view — that's where 360, new KPIs, visibility, transparency come in. So a lot of things need to be worked in that direction. So today I'm super happy when people come to me and say, 'Mr. Rodrigo, we found an opportunity and we invested $2 million in that thing.' And then they don't need to require me to approve it. They just say, 'We invest.' Thank you. That's the way we want to manage this company: if you feel that you have an opportunity, just do it, then let me know later. Of course, you need to have a transparent track record. They feel whether they're going to succeed or not, and why, and so on. But don't wait for the senior manager to give the okay — just move and then let me know.

Um, again, and I will repeat a little bit what you mentioned, but it's — and I normally — right, it's a different mining company, and many investors in the beginning still yet like to ask, 'Well, Rodrigo, but what is your major asset? What is your best asset?' Yes, right? Because normally the companies like to have this as flagship assets, something that really differentiates them from the other ones. And if you look at our portfolio, we don't have it. Most of the assets are very similar, and there's no extraordinary mine. We have nothing in Canada — in fact, yeah, in Canada. And I like to say where our best asset is our team. And if you think about it, this is probably what's standing out in terms of returns for Aura, because when you value the people more than the asset, you will build a very strong team. And with this very strong team, you can make extraordinary results with average assets. And average assets are cheaper to buy compared to extraordinary assets. So if you focus on extraordinary assets, you're going to have average returns with average people, because you're going to pay more for those assets, and you will not focus on the team; the team will not be able to get the most of them. So if you flip the mindset and say, 'No, I need to focus on the team, and I like to have average assets because we buy them cheaper, and with an extraordinary team' — if you look at all-in sustaining cash cost today, it's way below the average of the sector, way below the major mines in the world, major companies. And that's because I think we have this mindset of getting the most out of our average assets and not trying to focus only on the asset itself.

Well, we have two — we have gold and copper, right? You mentioned about the industry cycle. Yes, it's a cycle, but on the long term, it has proven to have a better valuation, gold, for example, than most other investments, right? I was just looking yesterday — if you take gold since 1971, when you had the Bretton Woods disruption and Nixon broke the peg — the valuation of gold now is way above the S&P 500, Dow Jones, and many other industry standards. And I was just looking at an interesting comment: why are all the analysts analyzing cash flows, earnings per share, and trying to find the best — spending 14 hours per day to find the best investment? Those that bought a brick of rock, a brick of metal, gold, made much more money than all of them. But in the end of the day, it shows that although you have selloffs on the short, medium terms, the long term for gold seems to be always up, right? So I'm not afraid of the cycles. I think we are in the industry of gold. If someone is concerned, they should sell their shares, not us trying to manipulate — if gold should go up, we do this, down, this. We don't think about gold price, right? I tell everybody it's so difficult to produce a gram of gold that if we knew about gold price, sell the assets and then open a hedge fund. Our job is to produce as much as we can with the lowest cost we can, and let the market decide about the gold price.

I think it's a combination. We are a new story, right? The Aura as we know today has been built since 2017. Before that, it was not a successful story. It had some not very good legacy in Canada. So we changed everything in the company, and doing turnarounds, we were totally focused on the assets. So we were not talking to any investor until 2020, and then in 2020 we listed in Brazil. So we focused more in Brazil. So it took a while for us to start talking more with the US and Canadian investors. So many of them are not even aware of us. Of course, those that are specialized in the sector, yes. But I think there was — and we are different — and I think they were skeptical: 'Will this guy be able to build those mines? Rodrigo is not from the sector. They are doing things very different, but are those mines going to really be profitable? They don't have any flagship assets.' So we didn't fit much. But I think now — and another thing is we didn't have enough daily trading volume. So we were trading $1 million per day, $1.5 million per day. So even if they wanted to invest in us, they would have a limited ability to get in and out. So most of the feedback we were receiving since '22 is: 'Rodrigo, we like the story, we would like to invest in you, but with $1 million our fund cannot invest. Try to work on the daily trading volume and then come back.' So we listed recently on NASDAQ with a new issuance of $220 million, and now our daily trading volume is hovering around $20 million per day. So now, for the first time, more sophisticated and large investors are looking to us and investing in us.

No, I think that the Middle East and Asian investors — they like gold, they like natural resources. Super sharp people, super highly educated, hard workers. I've visited the Middle East many times, not necessarily to talk to investors, but in the past life and also for other subjects. I've been in Qatar, in Doha, I've been in Abu Dhabi, Dubai, Kuwait, and also in Saudi Arabia, in Riyadh. So I think it's still untouched from us. I think that's why we like this kind of conversation, so we can get our story more out in the Middle East. But we'll definitely — but we also felt that we had to improve our daily trading volume first. Now that we did, you will hear more about us going to conferences and talking to investors in the Middle East. They do appreciate gold. They like — no, it's gold — Aura is not only about gold; it's gold with high growth and high dividends. So mostly investors in the Middle East and even the US, they also like it.

Yes.

Very, very simple. I don't want to extend too much on the technical solution. I'm also not technical, but there are a few phases of any mining company, right? The number one is what they call exploration. It's drilling and doing studies to understand where you have the deposits. That time can take five, six, seven, eight years, maybe consume 50, 60, 70 million. So that you can — and if you find the gold in eight years, you prove what we call reserves. Most of the times they spend all this money and it doesn't prove. So it's high risk. Very high risk exploration. Super high risk, but super high returns, right? That's not where we play, right? We don't feel we have the skills to find mines out of the blue. But then you have the second phase: once you proved, you need to do all the engineering, do the financing, raise the capital, and build. That takes two or three years, depending on the mine. And then you have the operation, right? We like to build and we like to operate, we don't explore, right? And then go into the process. So Aura is not exploration. It's very different. When you're looking at gold mines or mines, try to understand which phase they are, because they have different risks, of course, different expected returns. But on the process itself, which is super curious, is we mine on average 1.2 grams per ton of mineral, and for every ton of mineral that is there, there are four or five of not contained land. So you actually need to move five — not that each mine is different — but you only have five, six tons of land to have one gram per ton. So you've got to be very efficient doing that. And then once you get the one gram per ton, you put it in a plant, a sophisticated, high-tech plant that can cost 150, 200, $300 million. So they need to crush and go through a lot of chemical and gravity processes, sophisticated, run by all computers, so that you can absorb — I've never seen gold in my life — but they are invisible, they are invisible. So those sophisticated [processes] capture the invisible gold and then put it in the solution, and then we can do electrolysis, and then you can smelt the bar. Right. So when everyone reaches the bar, say, 'Well, there was a lot of work, right, to get that.' That's why gold price is super high. And so once we produce the bar, it goes to what we call refineries. The refiners are in Switzerland, Germany. There are some refiners, I believe, also in Dubai, the United States, and Canada. So the refiners are the ones that are going to elevate the purity to 99.9999%, put it in a one-kilogram standard, and they stamp that so it can be sellable in the exchange. So we actually don't see who is our end customer, because you sell stocks. So there's a bid and ask. I say that commercial area and one telephone, because you just see ask and then you sell in the market, and then whoever buys, you don't know what they're going to do — that goes to jewelry, goes to ETFs, goes to bank reserves, and so on.

Probably... I think one or two swimming pools.

No, but people say Buffett doesn't like gold nowadays. What's your — but the fact is that gold has appreciated way more than the stock exchange. Not with Warren Buffett, because he could pick the best-performing stock, right?