The Age of Special 'Corporate' Relationships

It has often been said in financial history that when times are changing, those who fight the war with old weapons turn out to be the losers. There are more losers than winners, in fact 90 percent of the people are losers.

The change, whether it is formal or timing, is not for display on CNN.

The scene is August, 2007. Almost all the so-called exploration stocks not only lost 50 percent of their values, but they lost their promotional ability and they are no longer courted by underwriters.

Yet, the reality is that the outlook for industrial minerals has never been better. With the exception of gold and silver, the base metals became the discovered essential pieces for the 21st century.

Seven billion people are working, and the so-called 150 million lunatic fringe is getting more and more interested in money. The world is consumption oriented, and nickel, molybdenum, steel, copper and iron ore has bigger and bigger demand for consumption, and they have developed what is called the subject of Natural Buyers.

Let me put this in perspective. If seven billion people increase their consumption by $1,000 per year, we have an appetite to provide the goods and services to satisfy $7 trillion extra a year.

To put this figure in perspective, $7 trillion is the entire national debt of the United States, a debt which we have accumulated over an historical period of 250 years.

The Chinese have less than $2 trillion currency in service.

The Russians have only $200 billion.

This is my message to my friends who are upset about the recent drop of uranium and nickel.

Returning to reality, we need new techniques to find this money and develop your corporation in the current environment.

I recommend that in order to raise capital companies either dissect themselves or form partnerships to make themselves attractive for underwriters for secondary offerings.

Suppose two or three or four companies form a holding company contributing shares and some money to this new entity. Such holding company, which can be pure molybdenum, or three nickel companies, or the combination of nickel, molybdenum and uranium company, represent the combined potentials of the three companies.

The other day I analyzed a molybdenum company, with credentials, $40 million mining potential, $14 million market cap.

It is a small company.

Assume it is part of a holding company, let's assume three molybdenum companies. Assume each company contributes $3 million worth of stock or let's say a total of $10 million in value.

If an underwriter raised $5 million for such holding company, there is always a possibility that one of the three corporations will have a sudden advance in exploration. It's own stock will move, but so will the holding company and consequently, more money can be raised. Such funds, of course, are available on a pro rata basis to the three parents.

The holding company can, of course, use cash and stock to acquire a fourth or fifth company, and expand its mineral base.

There is some similarity how Brascan in Toronto and Anglo-American in Johannesburg created itself.

There are of course many formats to my theory.

A single company can make one or two of his subsidiaries public and become its own holding company.

Last, but not least, the seven billion people make themselves fat in the mining world's other than product demand. The Far East and Middle East have money. The London brokers are already busy channeling the petrol dollars into mining ventures.

The North American continent should take advantage of what is available. However, it would not be a mistake if American and Canadian underwriters would form a link with our British broker friends and syphon some of these monetary resources to home.

In all senses of the word, let us not forget that we still have