A Melman Minute — March 9, 2011

Well, this year's giant PDAC gathering is about to wrap up for another year and, aside from any other facts and figures, this will go down in history as one of the largest, if not THE largest gatherings of mining people in history. Early projections have estimated attendance this year at 25,500, far in excess of last year's estimates of 22,000, and also eclipsing by a wide margin any previous PDAC gatherings.

One of the important features of PDAC conventions is the presence of many national exhibitions whereby countries attempt to promote mining investments in their native lands. The benefits of mining investment are many, including payment of exploration and development fees, payment of staking fees, training of indigenous peoples, payment of various taxes, etc.

However, while it may be unkind on our part, we at TMR cannot help but believe that many of the people staffing these exhibits do not understand the nature of mining expenditures, nor the difficulties of raising capital for mining ventures and, most particularly, they do not have sufficient understanding of the need for speed in the advancement of exploratory and development work.

We attended two of the most prominent symposiums put on by countries, namely Colombia and South Africa.

In the case of Colombia, that country is rapidly emerging into the modern economic world and appears ready to use its exceptional geology to promote mining as an important part of their work to restore true prosperity. However, during the various "question and answer" times, questions were raised regarding the high bureaucratic expenditures relating to staking and holding on to territories as well as the lengthy time delays inflicted upon the industry while the bureaucracies attempt to satisfy detailed and complex regulations generally supported by the environmental community, aboriginal influences, religious leaders, etc.

One of the leading bureaucrats - whose name and title eludes me - actually went so far as to say words to the effect that, "...this is the way we do things and we will not compromise our requirements." Another question related to the exceptionally high fees imposed on mining exploration and the audience was told words to the effect that, "...they would look into the matter." But no promises were made and no specific action was proposed or taken. Just vague promises, but there was clearly a temper to the meeting that vague promises were unlikely to mollify the audience.

The other symposium we attended was the one from South Africa and we were struck by the fact that the entire head table, at a symposium supposedly for the purpose of promoting mining investments in South Africa, was composed of bureaucrats, ministers, union leaders and other government personnel whose comments actually seemed geared to provide reasons for the mining to NOT consider investments in South African mining. There was not one representative of a private mining company on the speaking roster.

There were comments about how expenditures for worker safety had to be made; how the black workers who had been under-trained should now have that fault corrected at additional costs to the mining community; how their government was somehow truly entitled to demand and receive partial ownership of private projects; how it was somehow correct for the government to use taxpayer funds - many of which were collected from the mining industry - to finance government-owned mining operations which stood in direct competition to private enterprises and how the private industry now had to take measures to correct the injustices which occurred during the preceding 125 years.

Somehow, we received the impression from these two gatherings and from other conversations that bureaucrats in general are simply not aware of how difficult it is to raise capital to finance mining operations and how important it is for newer companies to show true progress in order to receive further financings.

Perhaps gatherings such as PDAC will allow them to learn.

Unfortunately, we have to end these musings early in order to catch our return flight to Vancouver Island. Briefly, markets are relatively quiet this morning and as of 7:30 AM PST, precious metals are slightly higher on balance and financial markets are little changed, as is also true of most currency, interest rate and energy markets.

Next Melman Minute scheduled for Friday, March 11, 2011

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