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Mining Deal Club

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Lots of Respect for Mick

The fact is that this downturn is not going to last and even Mick (Mick Davis, outgoing CEO of Xstrata) is figuring out how to position himself for the recovery. 

I remember back when I had a real job sitting in a room with Mick and a bunch of angry shareholders, and someone (a fund manager) asked him to apologize for issues from 2008. He was defiant and just laid into the poor guy. He was right and the fund manager was wrong.

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Why We’re Not Showing You Who Will Fail

There used to be a website called F-ckedcompany.com. It kept track of the high tech companies that were f-cked and was full of rumors and gossip, and frankly was one of the best pre-Twitter gossip sites on the Internet. 

I was addicted to it for a while, never posted, but read everything. 


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Leveraging Your Gold

More than almost ever before, gold is being used for collateral for loans, hedge funds are borrowing to buy it, and Indians are using it for shadow banking loan reserves. There is a loan against a significant proportion of the world’s gold. 

These are not 30-year fixed mortgages, these are not loans that as long as you pay the interest you get to keep the loans. These are collateralized loans. If you miss a payment, the gold will be sold, if the price of gold drops enough, the gold will be sold, if the rest of your portfolio has an issue, the gold can be sold. 



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When is Market Bottom?

Before this ship can recover, we need to scrape some barnacles off the bottom, clean the oil tank of water, and buy some new spark plugs. 

The barnacles are the junior exploration companies that cannot pay their rent, don’t have assets worth saving, and fail to understand that six months is not going to save them. Some of the projects we have looked at as an industry are not going to make it. Management should have the wisdom to say, “OK, what is an economically feasible project and what will it take for my project to make it to that stage?”  If their project is NEVER going to make it, they should have the wisdom to kill it--and maybe even the company. 

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It's OK to Fail

We are in the season of failure and everything looks bleak.

With that said, it’s important to remember it’s OK to fail. We all have failures, and they define our character. 

This week, someone told me that we go through rough market periods so that we can treasure the times when the market moves in our favour. 

I think it’s different than that.  Not everyone can succeed in any business. The ones who can succeed however are those who have failed in the past and learned from the process. You must be able to admit you don’t have a viable plan, and then plan on the next steps. If you panic and ignore the facts, you are dead.  You have to carefully understand what you have, what you do not have, and what your real options are. 


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