311: Lessons in Success from Building and Running Over 15 Multi-Billion Dollar Operations with David Garofalo

Dave Lukas, The Misfit Entrepreneur_Breakthrough Entrepreneurship

This week’s Misfit Entrepreneur is David Garofalo. David has 30 years of experience in the creation and growth of over 15 multi-billion-dollar sustainable mining businesses across multiple continents and has led the largest merger in gold mining history valued at $32 billion dollars. That’s a heck of a track record. If that is not enough, David is still at it. He now serves as CEO and Chairman of Gold Royalty Corp, a precious metals-focused royalty and streaming company. The Company acquires royalties, streams and similar interests at varying stages of the mine life cycle to build a balanced portfolio offering near, medium and longer-term attractive returns for our investors.

David has won just about every award in the mining industry possible as well as awards such as Canada’s CFO of the year. While we have had guests come on to discuss the gold and precious metals markets before, the thing that interested me most about David was the way he put his new company together and the wealth of experience he has gained in building not one, but over 15 billion-dollar companies, and I can’t wait for him to share all he’s learned on his journey!

www.GoldRoyalty.com

Ticker Symbol: GROY

David started out as a CPA in the 80’s with Deloitte and cut his teeth there. He was in the mining sector and learned the business from the ground up. Over the course of his career, he has been involved in the construction of 15 mines across the world with the majority of his time in the C-Suite.

What is your secret for continued success?

• It’s going back to the same people over and over again.
• David has assembled a great team that he brings with him into each endeavor.
• David brings the strategic vision, and they help execute.
• It is about people at the end of the day.

Is there a formula or set of principles that you’ve used consistently to build your companies?

• For mining, it starts with geology. You must have a sound geological model, sound exploration principles and sound mine development principles are foundational to success.
• It comes down to having the right foundations and principles.

At the 8 min mark, David talks more about the mining business and minimizing risk and lessons on how to manage it.

Thoughts on dealing with the stress and risk of running a business. How do you handle that?

• Having a great team makes a big difference.
• Recognize you are not a master of everything and that you have to delegate or find others to fill the gap.
• It cannot be all on your shoulders.

Talk to us about your latest company.

• It is different than what he’s done in traditional mining in that it helps to provide capital for explorers and developers.
• In return, they get a royalty on the mines and projects.
• The get a percentage of revenue off the top.
• Everything David has done to this point has prepared him to build the company.
• The company is publicly traded under the ticker GROY.

State of the state in the mining industry? What are some of the keys to successfully investing in it?

• It’s never been a better time for gold as an asset class because of being in the inflationary cycle we are in now. The highest since the 70’s.
• There are a lot of parallels.
• Inflation adjusted; gold could go to $3000/oz if things play out like the 70’s.

At the 24 min mark, David and I have a great conversation on rates and the FED and the differences between now and the past. Especially with the debt the US has now compared the past. It’s great to just listen.

Thoughts on how businesses can thrive in an environment of prolonged inflation and higher costs?

• If you are in an industry that has pricing power, you can take advantage.
• In David’s case, cost inflation plays into the royalty business and avoids inflation risk.

One thing to note is that in a bull market for precious metals, silver performs better than gold. So, it has potential for a lot of upside.

Prediction for when precious metals go parabolic?

Later in 2022.

• When capital gets reallocated, it doesn’t go in a steady methodical way.
• There is typically a catalyst and then a stampede. It happens quickly.
• All the ingredients are there.

Best advice on M&A and selling/acquiring business?

David tells the story of his $32 Billion merger with Newmont.

• Recognizing the timing is very important.
• If there are great synergies and economies of scale, then it makes sense to bring companies together.
• You have to do a lot of work on making sure the fit is there and that the cultures can align when brought together.
• You have to make sacrifices in the best interest of the company and shareholders. In David’s case, he had to give up his job.
• Most deals don’t have because of social issues – ego, who get’s what job, etc.

You talked about you built your core team. How have you created a culture for the team to want to come together again and again?

• We’ve made it fun and enjoyable.
• Surround yourself with people you like and respect.
• Make sure they have the right skillset and values that align with the team.
• If you do it right, it is like catching lightening in a bottle.

Any specific traits you feel are most important to succeed in today’s world?

• You must have resilience.
• You must have respect for those around you and show it.
• Treating people extremely well is very important.

Any other important leadership lessons people should know?

• Don’t give up.
• It’s ok to be a bit stubborn in realizing your vision. ​

Best advice for an entrepreneur just starting out?

• Choose your friends well.
• Surround yourself with people that have integrity, the right attitude, and right skillsets needed to help you build your business.

Best Quote: Surround yourself with people that have integrity, the right attitude, and right skillsets needed to help you build your business.

David's Misfit 3:

1. Show up.
2. Be loyal.
3. Stay healthy.

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