03/20/2012
December 3, 2017
02/21/2012
December 3, 2017

03/12/2012

You may have seen this You tube clip on the OT mine

http://www.youtube.com/watch?v=UoY5cVIdVMU

It’s truely a massive mine they’re building…


Hi Kuppy,
Firstly, thanks a lot for sharing your first hand knowledge and wisdom about Africa.
I was wondering if you agree with Mr. Buffett recent comment on “buying a couple hundred thousand single-family homes”. If so, which cities would you find more attractive.
Many thanks as always,

I’m not sure which comment from Buffett you are regarding. On single family homes, I would probably say to buy them in Ulaanbaatar, Myanmar or Namibia or some other city that’s going to see some sort of huge boom. I’d think that in the US, the best that you get out of homes is some inflation protection…. American homes will experience a multi-decade bear market and are still rediculously overvalued–even before you see real incomes decline due to government intervention. I cannot really see a reason to be bullish on any real estate assets in the US outside of some selected places like the Dakotas… Always go looking for bull markets. Don’t buy things just because they’re down a lot from silly prices.


Kuppy, You are my hero, thank you from all of us little guys for your insight! If you had only 100k to invest for a high risk / high return account, where would you put your money?

If I had one dollar or 100k, I’d invest it the same way. You cannot gamble with your money and look for something risky to do. I would find a few well-run small businesses with strong macro tailwinds, make a bet amongst all of them and spare a bit for some gold.


Sigh…..

“Antonopoulos and his partners spent hours collecting papers from tax offices, the Athens Chamber of Commerce and Industry, the municipal service where the company is based, the health inspector’s office, the fire department and banks. At the health department, they were told that all the shareholders of the company would have to provide chest X-rays, and, in the most surreal demand of all, stool samples.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_21/02/2012_429208

And guys wonder why Greece is bankrupt…. No amount of bailouts will fix an economy that is rotten to the very core. Everyone should read this article twice because I am worried that this is the direction that America is going as well.


Kuppy,
I believe you have stated that EGD is a fairly large position for you. How do you determine your end game for it? Do you have a specific price target? Do you just ride it as long as you think it has legs? Or until its stock price more accurately represents a fair valuation? Thanks for the great column.

I intend to own it until the business has stopped growing. That would only happen if either mining companies replaced all their depleted reserves, or substantial competition shows up. Of course, as a very large position, I have internal position limits and from time to time, I sell a few shares as you have to stay disciplined about position limits.


Kuppy- I was reviewing some Energold info and came across their updated presentation that cites having 234 rigs (as of 1/16/12). I believe this certainly includes those that they acquired with Bertram & Dando, but it still seems higher than I expected. I’m just curious if based on the latest you’ve seen how their trajectory falls within your expectations.

In all honesty, I don’t really have any expectations for rig count. I track it looking backwards for ease of reference, but I’ve always found models to give you a false sense of confidence on things. If it doesn’t make sense at first glance, and if it doesn’t seem cheap on the back of a napkin, I’m just not interested. Once you start building models, you start to justify ideas that just might not be that good. Sorry I cannot help on this one.


Dude, I was thinking you were actually down in Africa looking for investment Idea’s when I picked up my subscription of SI Swim suit edition and la ti’ da guess what bikini babes in victoria falls .. Harris your f’n smarter than I thought!

Guess I went the wrong week…. All I saw were some monkeys and a few kids hawking 100 trillion note zim dollars (which incidentally are appreciating rapidly since they’ve stopped printing them….)


Kuppy,

I see Fred at EGD is addicted to these bought deals.  Love that he throws in an extra 6% cash commission and 6% warrants too.  Must be a struggling enterprise with an overleveraged balance sheet desperate for cash!  Seems Fred would make a great VP of operations.  EGD needs a real CFO, from the outside.  When they promoted from within I knew nothing would change in this respect.

Still, they did the deal because business is booming so it’s just a short-term set back.  But you would think that knowing they are on the verge of announcing a strong Q4 they would do the financing after the announcement which would likely get them a better price.

Each time they announce one of these deals the stock tanks.  You would think that would get their attention.  Do you think Fred isolates himself from the financial community?  I mean, doesn’t he feel any pressure to improve his financings?

Let’s face it, these guys are just awful at the capital markets. For a bunch of guy from Vancouver…..

Unfortunately, when you’re in a growing business, you need to work with the markets. Not against them!!! The whole point is that you want your shares to be fairly valued so that you do not dilute your shareholders every time you do something. Energold is horribly undervalued–but maybe this is because they keep dumping bought deals on investors and have lost the confidence of the investment community.

I think you are right. Fred is a great COO. They need some professional help on the capital markets side.

I have no issues with companies issuing shares to raise capital and grow the business. In fact, I would expect Energold to continue raising money in the future. Thus far, all their acquisitions have been brilliant. I just spent two days with Brian Bertram up in Fort McMurray. His company is really well run and in massive demand. My complaint is that the shares trade at a mid-single digit multiple on earnings and they need to do more to fix this valuation gap before just blindly spraying the street with shares. I don’t object to financings. I just simply abhor the concept of bought deals. They’re about as shareholder friendly as a death spirl convert. …


Hi Harris, what is your opinion on EGD’s recent $20MM bought deal financing? I am a little confused why management chooses to raise capital at this moment. It seems that under current pricing and capacity utilization, EGD will have more than enough cash to build a lot of rigs, unless management wants to do acquisitions.

I’m guessing that they’re either looking at acquisitions or buying some much larger (more expensive) rigs for Bertram. In either case, I’m sure the money will be used well. I have no problem with raising capital. I just hate bought deals. I think if they had waited until Q4 was out, they could have gotten much better prices on this financing.


Dear Harris,
I’m a reader of your blog since last year. I really appreciate to have some insight on “exotics countries”. The most exotics country I visited are Cameroon, Panama, and Algeria…
I was thinking of opening a brockerage account to trade on the ZSE, I’m in contact with Lynton-Edwards (on of the broker active on the ZSE) and Stanbic Bank (as a custodian) I would like to know (if you agree to share this kind of insight with readers) what are the most interesting sectors to invest in, in this country, I was thinking (from an european point of view) at mining and telecoms, but you maybe noticed some locally expanding sectors during your trip.

Once again thank you for sharing your travels/experiences with us.

Honestly, I have no idea what to own. I just feel like it’s hit rock bottom. I intend to invest some small money into a basket of companies and not think too much about the individual companies. It’s a call option on Mugabe eventually dying.


WOW! Beautiful pictures, thanks very much!

Is Namibia a safe place to visit? Expensive?

Namibia is very safe and rather cheap. We stayed at a beautiful bungalo hotel in the dune region for like $150 a night and it came with dinner and drinks.


You never dropped by East Africa..there is amazing value on the exchanges here. Especially the Nairobi securities exchange and the Uganda securities.

 

I never got to really look at the markets there. I did go to Tanzania for a week for safari–which was just incredible. There’s huge opportunity all over Africa. With a few exceptions, the whole continent is awakening.