By James Kwantes
Published first at Patreon
The risk profile of the junior mining sector makes it an unlikely destination for hedge fund money. The raison d'être of a hedge fund, after all, is to protect and make money – not vapourize it.
In a gold bull market like this one, however, the calculation changes. With gold above US$3,650 an ounce, up a sizzling 40% in the past year, identifying sharp management teams advancing solid assets could prove very profitable. Especially for Canadian gold projects.
One such company that fits the bill is developer Mayfair Gold (MFG.V), which closed a $40-million LIFE offering of $1.65 shares on Tuesday. Mayfair will use the money to complete a pre-feasibility study and for metallurgical and detailed engineering on its 4.3-million-oz Fenn-Gib deposit in Timmins.
Muddy Waters, the U.S. hedge fund that controls Mayfair, invested another $3.6 million to buy 2.18 million more shares, for about 16%. CEO Nick Campbell put in another $500,000 to take his stake to 1.1 million shares. Both Muddy Waters and Darren McLean, Mayfair's chairman, backed GT Gold, which sold for $400 million to Newmont in 2021.
A Smart New Voice: Darren McLean of Muddy Waters (June 4, 2025)
Muddy Waters - And a Golden Opportunity? (May 27, 2024)
Mayfair also landed Oaktree Capital Management, which invested $14.85 million for 9 million shares, or about 6.7% of outstanding stock. Oaktree was co-founded by Howard Marks, an American investing legend who remains co-chairman.
Marks's memos, published on the Oaktree website, and books are a valuable resource for investors. Take it from Warren Buffett:
"When I see memos from Howard Marks in my mail, they're the first thing I open and read. I always learn something, and that goes double for his book."
Consider the latest Marks blog post, The Calculus of Value (published on Aug. 18). It's a lengthy treatise on price, value and the interaction between the two, with insights for all investors including junior mining speculators:
A company may own land, buildings, machinery, vehicles, and natural resources such as mineral deposits or forests, and even facilities that allow it to derive electricity from river water or sunshine (which it obviously doesn’t own). These are tangible assets, and there’s often a market for them and a realizable price. But a company may also have assets that are intangible, such as patents, trade secrets, knowhow, research capability, reputation and image, human talent, management skill, and culture. Some of these may be transferable and salable, but others are not.
The bolding is mine. Identifying those intangible assets within junior mining companies is a goal of my writing, as well as a crucial part of the calculus in separating the wheat from the chaff.
Muddy Waters and Oaktree aren't the only U.S. hedge funds buying Mayfair. Today, Florida-based Regatta Investment Partners filed a $1-million purchase of $1.65 shares on SEDI, taking its stake to 1.42 million shares.
Studying money flows is also key to investing in junior mining. The arrival of blue-chip hedge funds on a junior mining share registry feels like another "pay attention" moment.
Mayfair Gold (MFG-V)
Price: $1.95
Shares out: 133.5 million, post-financing (135.5M fully diluted)
Market cap: $260.3 million
Disclosure: I own shares of Mayfair Gold, published in the public market, and have no business relationship with any company mentioned. This is not financial advice and all investors need to do their own due diligence.
