December 3, 2017
December 3, 2017


I am currently in Siem Reap, Cambodia. If you have never been to Angkor Wat, you owe it to yourself to get here.

Thank you very much for sharing your thoughts with us. I have been enjoying you recent travelogue immensely, including the excellent photographs.
I appreciate from your piece on the Ivory Coast that you have a way above average risk tolerance but I am interested in what you would do to hold onto assets in a frontier situation.
I have an old friend who operated in Russia and a brother in law in Poland after the break up of the Soviet Union. Both reported that all assets were in effect controlled by gangsters able to command and prepared to use armed men. My friend in Russia commented that he never dealt with anybody who gave the appearance of being anything other than a legitimate businessman, it was just that their business manger reported that parties of armed men would turn up at the mine each week demanding that the keys to the mine were handed over. The manger would suggest they made a couple of calls before they did anything unwise, after the calls the armed men would apologise for the misunderstanding and leave.
If one reads a decent history of the English in South Africa or the American West it quickly becomes evident that the rewards went not to the risk taking pioneers but the ruthless gangsters who arrived once money was being made. Many of those gangsters were then able to pay for history to cast them in a more favourable light.
So if you invest in frontier assets what do you do to hang on to them?

You raise a very good point. Its the reason why you need to be very confident in the rule of law in any country where you want to invest. If you don’t trust the rule of law, move on. If the laws change, you have to reevaluate. Usually, if you understand what is going on, you can figure out when that is, before others do. Every country has issues. Look at how we mistreated Chrysler bondholders in the bankruptcy. You take your own poison and hope that you are buying at a multiple that compensates you for the risks involved. I do not feel that the First World is compensating me well enough for all the crazy risks out there, meanwhile there are great places in the emerging world that are cleaning up their acts. I want to invest there. First I have to learn more about them.

Sometime ago you assked for suggestions as to how one might invest in Mongolia. I’m not sure of the quality of this idea; but one could look to see which mining companies have a large portion of their bets on Mongolia and are well connected politically?

The problem is that you end up investing in mining and not in the growth of the Mongolian economy caused by the mining bonanza. I want to invest in the latter. Mining itself is an awful business.

Was curious if you ever follow Mines Mgmt (MGN). Was a high flier from 2002 to 2004 going from pennies to $10. Its been basing for a few years. Silver Wheaton and GROW own a large stake in the company.

Until they get their permits, it’s not a mining company. It’s a play on permitting. 5 years ago, they assured me the permits were coming within 6 months. Will they have the permits 5 years from now? Or will they keep on diluting forever? Years back, I bought some, lost money and moved on. To add insult to injury, management repriced the stock options that shareholders kindly granted them. Meanwhile, I bought shares with actual money, but those were never repriced…. In my book, that’s dirty business. I want management teams that look out for shareholders–not just themselves.

As you know, the Haywood assessment of Invicta gives considerable upside for exploration. Do you think they are being reasonable, or unnecessarily cautious?

I haven’t read the report and probably won’t. If I read analyst reports all day, I’d never get anything useful accomplished–therefore it’s hard to say if they’re conservative or not. I think that the resource studies done by the company are conservative as they give almost no credit to rock that they know exists. They also know there are fascinating outcroppings on the property that have not been tested. The ore body is open at depth and along strike in both directions. It’s blatant speculation to say that there’s more there, but I feel that there likely is. Until they drill it, we won’t know for sure. Hope that answers the question.