The Horror…The Horror

I’m here in Toronto writing live from the
Prospectors and Developers Association of Canada (PDAC)
conference.

Tyler Laundon and I are working closely together
to find promising mining companies to write up full research reports for
Wyatt Research readers such as you.

It’s easier said than done. The PDAC conference is
the largest mining conference in the world. Hundreds of companies are
here, vying for attention. Many of them are tiny companies, and even a
small increase in volume could be huge.

*****And remember, the track record for mining
companies is completely dismal. Only 1 in 3,000 firms ever build a mine,
let alone mine a single ounce of gold. You can’t find a riskier
business.

And yet, everyone we talk to is all smiles, full
of vim and glowing with confidence.

For instance, we met face to face yesterday with a
small western firm with good looking resources in an area not currently
known for gold mining. It’s a small company, less than $100 million
market cap. They’re trying to get permitted to build a small mine at this
point.

They haven’t produced a single ounce. They don’t
have a mine built, or in any relevant stage of being built. The area
they’re in doesn’t have a lot of other gold mining going on currently.
The government they’re trying to secure permits from is not known for
being quick-moving or especially friendly to gold miners. They have very
little cash.

Sounds like a recipe for difficulty, at
least.

But the gentlemen we talked to were adamant.
Nothing but blue skies. No limit to the potential. Lots of upside.

He could be right.

*****We’re also looking into a small African
country’s mining industry. Ten years ago no one had heard of Burkina
Faso, let alone started building mines, let alone producing gold!

As you may know, it takes between five and ten
years to do the kind of preliminary work, testing, drilling, permitting,
surveying and finally building to get a mine from an idea into
production.

But the Burkina Faso government has made mining a
top-line priority. It’s now one of the most mining friendly countries in
the world, with practically no bureaucratic difficulties for companies in
the area to find the gold and dig it out.

That’s important, and it can make a
less-than-stellar deposit become more valuable than it might be in an
area where the government is ambivalent or hostile to the mining
business.

*****I know as soon as I mention Africa that some
people just shut down their emails. Lee Campbell, the Vice President of
Marketing here at Wyatt Research has a minor stroke every time someone
mentions Africa. For some people, Africa evokes images of bloodshed,
corruption, wild lands, brutal dictators, and more recently, rebellion,
rioting and civil war.

Or maybe they think of Joseph Conrad’s novel
“The Heart of Darkness” or the modernized film
edition “Apocalypse Now.”

In either case, the main antagonist in the story
dies at the end, uttering the words “the horror…the horror.”

And while he’s not speaking those final words
because he’s in Africa, it’s an image that sticks with people: when they
think of Africa, they think of horror. When they think of investing in
Africa, they think of losing all of their money down a horrible
hole.

But that’s a na