Yesterday, in my role as chairman, I updated my stock picking club (Hys and Lows) members on the performance – or rather the non-performance- of our portfolio of junior mining stocks. Last time I wrote about it, I said:
“For the last 24 months, reality has bitten. Themarket has put us firmly back in our place while lustily kicking our butts downthe sidewalk, up the alley and into the back yard. Year-to-date our portfoliois down 26% and, tellingly, 22 out of 25 stocks we picked are in the red. To befair on us, this is a reflection largely of the “nobody gives a fuck” state ofthe resource sector which is veering dangerously close to a 10-year low.”
Washuk is a very small town in central
Balochistan, Pakistan. Remote, hot, dusty and very unpleasant in an
“I’m-going-to-get-sick-and-die-here” kind of way.
Half a day south of the N40 highway in Pakistan, the main road heading west to Iran through the Baluchistan desert, lies the Ras Koh mountain range. Steep, rugged mountains with little or no forest cover cut by deeply incised “nallas” or dry stream beds which you don’t want to be stuck in when it rains. Not that it rains very often. I was there in 1997 prospecting for porphyry copper systems, hot on the heels of BHP’s massive Reko Diq discovery in the Chagai Hills.
Getting there was a 2 day drive from Quetta along the N40 dodging Iranian and Pakistani trucks. The driving was some of the worst I’ve ever experienced; if you ask me it’s a bloody miracle any trade ever makes it across the Iran-Pakistan border in one piece. Once you left the road to head south, you might come across convoys of armed pick up trucks smuggling opiates to the Makran coast. And then there were the delightfully named Camel Spiders; hairy orange buggers with huge jaws that may or may not eat camels.
A camel spider. Don’t even think about it.
With only a very basic map and a GPS, accompanied by a dignified elderly Pakistani geologist, Naseem (who spoke Baluchi) and 2 government soldiers, I was trying to find a way in to the centre of the Ras Koh range. Detailed satellite image processing in head office had flagged a large area that looked like it might be a porphyry system and which had to be checked. But after 2 days hiking we gave up. There was simply no easy way in that didn’t involve some pretty extreme camping and we weren’t equipped for it. So, Naseem recommended visiting the local governor to find out if there were any tracks or roads that we hadn’t tried and off we went to find him in Dalbandin.
Dalbandin. best seen from the air.
Dalbandin is a particularly unpleasant little truck service town. Dirty and hot, with –back then- only the cockroach-infested government hostel to stay in. What followed was a typical Middle Eastern tea-and-cake session with the Gov’ to honour the foreigner (me). Any excuse for a nice slice of jam sponge. After a couple of hours reminiscing about the glorious legacy of the British Empire (I kid you not) he looked at our map and drew a large triangle around the area we’d been trying get into and said in perfect English “Stay out of here” with no explanations given. On the way out, Naseem told me we should forget about that particular target and move on.
We headed west to Fort Saindak to chase different
targets out on the westernmost point of Pakistan where the Iranian, Afghan and
Pakistani borders meet.
Six months later the Pakistanis detonated 5 atomic bombs at their top secret test facility in the middle of the Ras Koh range. Our satellite photos had picked out the spoil heaps from the underground tunnel excavations. I’d been trying to hike into a nuclear test facility: a westerner with a digital camera and a GPS. Hello… Is that the Darwin Awards?
The Ras Koh ranges, shaking sedately in the evening sun.
In the
mid-1990s I spent the best of a year in the province of West Azerbaijan in northern
Iran, based in the small farming town of Takab. The area, about a day’s drive
from Tehran, is populated largely by Turkic and Kurdish people and Zoroastrianism is still practiced there. The day-to-day
language is Turkish. Rural and fairly remote, life for the villagers goes on as
it has for thousands of years.
Me (left) at 33.
I was
running an exploration program at a project called Zarshuran (“the place of the
gold washing”) working a 6 weeks in / 2 weeks out rotation with Budapest as my
home base.
The routine
in Iran was pretty simple. Get up. Eat breakfast: flatbread with honey, eggs and
yoghurt. Spend the day at the project. Come back to the Hotel Ranji in Takab.
Eat dinner: chicken or beef kebab, yoghurt and grilled tomato. Sleep. Repeat
for 6 weeks.
One day in
1996 or ‘97 my daily routine was pleasantly interrupted when a Dutch traveller
turned up at the hotel. In Iran for his friend’s wedding, he was on his way to
visit an archeological site near Takab: Tahkt –e Soleyman (the name means
Prison of Solomon and legend holds that King Solomon used to imprison monsters there.)
Zarshuran village, northern Iran
In need of
English-speaking company, I persuaded him to travel to my project for the day.
It was a 45 minute drive from Takab through small farming villages where he got
a chance meet the locals and photograph the hard-scrabble life of Iranian subsistence
farmers. As a bonus, I took him underground at a small but spectacular arsenic
mine to collect world-class samples of bright yellow orpiment (arsenic sulphide) from the ore pile.
Orpiment: Arsenic Sulphide
Twenty
years later, out of the blue, I got an email from him. He’d tracked me down on-line
using an old business card I’d given him during his visit. And attached were 20
scanned photos from his day on the project which he said was the highlight of
his trip to Iran. I was totally blown away. All the photos I’d taken at the
project were of rocks, drills, and general technical stuff with a few scenery
snaps thrown in. But here were photos of me, at 33 years old, looking vaguely
like a geologist on a day I’d long since forgotten about… being all earth
sciencey and authoritative at the Zarshuran project, which is now Iran’s
biggest gold mine.
It’s not a formal membership-fee type of club,
more a casual once-a-year gathering of 20-25 mining people at a steak restaurant
in downtown Vancouver. We meet in late January to contemplate the state of the
industry, drink good red wine and pick stocks.
The rules are simple. Everyone gets to chose 1
mining stock with the caveats that it can’t be a company you work for and it
can’t be halted or private. At the dinner, whoever chose the stock that went up
the most over the year is declared the winner.
Everyone who attends has to bring a $100 bottle of wine except for the winner, who eats and drinks for free. We run it like a fantasy hockey pool with the overall loser picking first for the coming year, but last place also gets to run the club for the next 12 months (which is why yours truly is running it this year. Thanks for nothing Volcanic Gold…)
This is where it gets a bit more interesting, because we also track the overall performance of the portfolio of stock picks, naively believing a) that we’re somehow smarter than the average resource investor and b) that we represent an experienced and deeply knowledgeable group of mining insiders who should know what they’re doing. Yeah right.
Waddya mean the portfolio’s down? Pass me the wine…
Two years ago we thought we were the bees
knees. Our portfolio was up an astonishing 250%. In fact, our record was so
good, if we were a proper hedge fund we’d have ranked almost the number 1 resource
fund in North America. If you’d invested $500 in each stock we picked, you’d
have made close to $32k profit. Not bad for 12 months.
For the last 24 months, reality has bitten. The
market has put us firmly back in our place while lustily kicking our butts down
the sidewalk, up the alley and into the back yard. Year-to-date our portfolio
is down 26% and, tellingly, 22 out of 25 stocks we picked are in the red. To be
fair on us, this is a reflection largely of the “nobody gives a fuck” state of
the resource sector which is veering dangerously close to a 10-year low.
On the bright side, I’m leading the pack. My pick,
Evrim Resources, is up a gratifying 196% which means I’m currently on track for
a nice free wine tasting. Chin chin!
It’s an old
cliché but very apropos at the moment. To put it in simple terms, the resource
sector is beyond crap and has been for a few years.
Investors
flit from one trendy idea to another gleefully proclaiming each to be the
future of equity investing until the bubble pops yet again. Lithium. Graphite. Rare
earths. Cannabis. Cryptocurrencies. Yadda yadda.
Sadly, they’ve
all but abandoned the mining and exploration sector. The TSX Global Gold Index
is sliding greasily down, inching its way inexorably to a 10 year low. The amount
of investment capital available to the sector has shrunk, and as a direct
result the pace of new mine discoveries has slowed to an historic low. We’re
not happy.
But, fear not kind reader. Here in the UrbanCrows nerve centre we endeavour every day to cheer people up. Part of our mission is to help you forget the day-to-day. So if you are actually thinking of investing in junior mining stocks; should you wake up tomorrow and find yourself overcome with the urgent desire to piss your money down a massive drain, here, courtesy of the IKN mining blog, is a flow chart to guide you through the process of shrinking your fortune. We wish you bon chance.
Investor Relations is a necessary part of the mining business. The strict definition of IR is that it provides sufficient information about a company to allow an investor to accurately value that company. Er… right. Too many charlatans and promoters who know absolutely nothing about the business other than pumping a good story. And with that said, I love this video.
Visiting an epithermal vein system in Chihuahua, Mexico earlier this year in the company of some fine people. Good geology and not too far off the road.
Visited a mining project near Reno a few weeks back. Place was littered with old mining equipment. Hard not to look moody in black and white. This broken down tractor was dumped in a back yard.
