Collin Kettell & Rick Rule: Why The Palisades Portfolio is Impossible to Reproduce

Key Concepts

• Merchant Banking: A business model focused on company building, financing, and strategic asset management.
• Warrant Bank: A strategy of accumulating a large portfolio of stock purchase warrants through participation in private placements.
• Prospect Generator: A business model where a company acquires large land packages, explores them, and seeks partners to fund further development.
• Net Asset Value (NAV): The total value of a company's assets minus its liabilities, used here to value Palisades Gold Corp’s holdings.
• Black-Scholes Model: A mathematical model used to estimate the theoretical value of warrants/options based on volatility and time.
• Junior Resource Space: Small-cap companies involved in the exploration and development of natural resources.

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1. Business Model and Strategy

Palisades Gold Corp operates as an active company builder and merchant bank. The core strategy involves:

• Company Formation: Identifying ideas, building companies internally, and eventually taking them public.
• Financing: Acting as a prolific financier in the junior resource sector. In 2024–2025, the firm participated in over 200 financings.
• Warrant Accumulation: By participating in private placements, Palisades secures "warrant coverage." They currently hold over 1.5 billion warrants across more than 200 companies.
• Liquidity Management: The firm maintains a $200 million liquidation value and a credit facility with the Bank of Montreal (up to $40 million) to leverage their long-term positions for short-term opportunities.

2. Performance and Track Record

• Capital Efficiency: Since inception, the company has raised less than $15 million in capital but has distributed $75 million in value to shareholders through seven separate distributions.
• Dilution Control: Since going public via direct listing in 2022, the company has maintained low dilution, issuing only about 6 million shares (less than 10%).
• Management Alignment: CEO Colin Catel and strategic backer Mike Parker own/control approximately 45% of the company. General and Administrative (G&A) expenses are kept under 2% of the total portfolio value annually.

3. Valuation and Assets

The company provides a conservative NAV calculation that excludes the "option value" of warrants and the potential value of their private subsidiaries.

• NAV vs. Market Cap: The reported NAV is approximately $3.10 per share, while the stock trades around $2.70.
• Portfolio Breakdown:
  • New Found Gold Corp: ~$80 million (approx. 8% stake).
  • Diversified Junior Equities: ~$50 million.
  • Warrants: ~$100 million (intrinsic value).
• Hidden Value (Unvalued in NAV):
  • Made in America Gold Corp: 90% ownership; the third-largest landholder in Nevada.
  • Radio Fuels: 100% ownership; holds the Eco Ridge uranium/rare earth project in Ontario.

4. Market Perspective and Outlook

• The "Warrant Bank" Advantage: Colin Catel notes that the market environment for securing warrants has become more competitive. He argues that the "best of the best" deals with full warrant coverage are harder to find now, making direct investment in Palisades a more efficient vehicle for investors than trying to replicate the strategy individually.
• Market Cycle: Both Rick Rule and Colin Catel anticipate a "rising tide" in the junior resource sector over the next 12–24 months, which they expect will lead to "hockey stick" performance for their portfolio.
• Strategic Shift: The firm is moving toward monetizing specific assets, such as the potential public listing of Made in America Gold and the advancement of the Radio Fuels project.

5. Notable Quotes

• Rick Rule on the Conference: "We're going to give you more information over 4 days than you can absorb in 4 days."
• Colin Catel on Strategy: "We've calculated our acquisition cost per warrant and it's around a penny a warrant... on an intrinsic basis [they] are now worth about $100 million."
• Colin Catel on Value: "This is very much so a company built by shareholders for shareholders."

6. Synthesis and Conclusion

Palisades Gold Corp functions as a specialized investment vehicle that provides retail investors exposure to the high-risk, high-reward junior resource sector. By acting as a merchant bank, the company leverages its expertise to filter hundreds of opportunities, securing equity and warrants at favorable terms. The firm’s success is rooted in its ability to generate significant capital returns relative to the small amount of capital raised, primarily through the successful incubation of companies like New Found Gold. Investors looking for exposure to this sector are encouraged to contact Colin Catel directly at colin@palisades.ca.