Musings on Investing

Japan: the Future of Humanity

Irving Resources (IRV)

Major media publish regular reports about the Japanese refusing to have sex, and the large number of people in their forties who are still virgins. The “vagaries” of Japanese sexual life amuse outsiders. Manga (comics) and anime (animation) cater to fantasy by creating virtual worlds. People play pachinko (an arcade game like pinball, also used for gambling) for 18 hours a day. Girls in cute uniforms entice customers into maid-cafes, or perhaps to date joshi kosei (high school) girls.

International organizations beg Japan to listen to tear-jerking stories about Syria and Libya, and to show compassion. The Japanese are constantly reminded that if they want their old and infirm people to be looked after, they must allow immigration. While the population of Canada is 21% first-generation immigrant, and Australia 26%, Japan is still 98.5% ethnically Japanese.

According to the media and international organizations, Japan is on a path to self-destruction.

I have a very contradictory assessment of Japan. I am a huge fan. In Japan, I see the future of humanity. Perhaps Korea and China should be included in that vision of the future. South Koreans and Chinese—who might superficially dislike Japan—have eagerly copied Japanese ways. Japanese products are sold in abundance in East and Southeast Asia. All the way to Malaysia and Singapore, people look for models to Japan and now increasingly to South Korea, which copied its economic miracle from Japan.

I explain my views on Japan in details, and why I disagree with the international organizations and the media in the linked article. Also, here is an interview I did with Maurice Jackson on the subject:

On investments…

With a grade of 30-40 grams per ton, Hishikari Mine in Japan is one of the highest-grade gold mines in the world.

Until not too far in the past, Japan was an extremely expensive place to operate in. At one point, the assessed value of Tokyo’s Imperial Palace grounds was higher than that of the entire state of California.

Over the last few years, Japanese property-bubble has burst and its currency has fallen significantly, making Japan more attractive, including for mining. Japan has also relaxed its regulations on exploration.

Irving Resources (IRV; C$0.78) is one of the two Canadian companies doing exploration work in Japan. The company is run by Akiko Levinson and Dr Quinton Hennigh. Ms Levinson earlier ran Gold Canyon, where she and Dr Hennigh developed one of the biggest gold deposits in Canada. She is not only well-versed in running a Canadian junior company, but she is also Japanese and splits her time between Japan and Vancouver (Canada). That makes her uniquely competent to operate in Japan.

I recently visited their projects. Their Omu project, based on my back-of-the-envelope calculations, should have at least 60,000 ounces in the high-grade veins that are visible. This rock can be scooped off and shipped to a processing facility of Mitsui. This by itself should justify the current market capitalization of IRV. The project has never had proper drilling work done and it is here that an upside exists. Could it be another Hishikari? Probability of a win is always low, but I am always happy to get such an upside for free.

IRV has another target, Omu Sinter, about which their geologists seem most excited. It could be one of the bigger sinters in the world, with a strong possibility that a well-preserved system lies underneath it. Geophysical work done so far point to that.

I love Japan. I like the management of IRV—they are competent and uniquely well-suited to operate in Japan. IRV is well-cashed up, and has a very tight share structure. My downside seems well covered by the visible veins, and the upside could be very exciting.

Warm regards,

Jayant Bhandari

Associate: Rajni Bala

 

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