11/08/2010
December 3, 2017
10/31/2010
December 3, 2017

11/05/2010

Still in Cambodia. Heading to Thailand for a few days, then back to North America at long last.


Kuppy,

Beers and Babes, great article, talk about a trip down memory lane…..My question is now that the miners are reporting their earnings, what would be a robust exploration budget that would get your attention and have you seen the increases you’ve been hoping for?

Glad you liked the article. I hate to get up onto my soapbox, but the older I get, the more silly these election cycles seem to feel. Maybe I’m just cynical, or maybe we really are just voting for Beer and Babes. Both parties are offering the same thing—endless deficits and wasteful spending.

The industry probably needs to spend $10-$15 billion just to replace depletion. Only 2008 really came close to keeping up with depletion. If you think about a 40 year cycle in commodities; in the highly profitable part of the cycle, which seems to lasts about a decade, exploration spending not only keeps pace with depletion, but it’s a few times depletion in order to make up for decades of prior depletion. Eventually, this creates the massive oversupply that inevitably crushes prices. That part is more than a decade into the future though; first, I think we see years where exploration spending is in the $25-$50 billion dollar range. It’s coming.


What do you think of the Energold results reported yesterday? Is this what you expected?

http://www.energold.com/s/NewsReleases.asp?ReportID=426236&_Type=News-Releases&_Title=Energold-Announces-New-Record-Number-Of-Meters-Drilled

These are just huge numbers. HUGE!! 136% growth in meters drilled year over year. Even more importantly, the press release hints at big increases in pricing. When I look around the world, there are very few businesses that are making new all time highs for revenue or profits. Most companies are struggling just to hold steady at 2007/2008 levels. Energold hit a new all time record and that record was nearly 25% better than the prior record in Q2/2010 (last quarter). I expected this sort of growth, but thought it would take until next year.

The secret to making money in investing is to find a secular bull market (mining services is still my favorite theme) and buy the best run businesses. Usually, you have to pay a whole lot for this sort of growth. Energold trades for about eight times what I expect next year’s earnings to be. You also get a nice sized piece of Impact Silver for free. It’s insanity. I’m tempted to buy a whole lot more honestly (and this is already my biggest position at cost). I love situations where a stock can increase 75% from where I bought globs of it, but it seems cheaper on a multiples basis because the business is increasing in value even more rapidly than the share price.


Look forward to how you find things in Cambodia, although I haven’t managed to get there yet, an area that interests me is the southern coastal region – could have serous development potential, in comparison the coastal area of Vietnam  over the past ten years has undergone huge development, (not all good, very Asian) lots of $’s from the US and more recently HK, Japan, Korea and i don’t know where including considerable recycled Russian rubbles. When I first came here the Viets didn’t even know what a beach was and now the status symbol is to have a million dollar coastal villa.

Everyone in Cambodia claims that it’s where Vietnam was ten years ago and where Thailand was thirty years ago. If they’re even soft of correct, there is a whole lot of money to be made here investing from a low base. I’ll post some thoughts on it in the next few days. I went to Sihanoukville for two days. If you think that beach property will boom, that’s the place to look. Property is pretty cheap if you get it right. Then again, there’s a whole lot of beach on this globe….