Musings on Investing

The Third World will stay the Third World

Novo Resources (NVO.V), FPX Nickel (FPX.V), and Thunderstruck Resources (AWE.V)

Since the end of the USSR, there has been a huge amount of euphoria about the Third World, now known as Emerging Markets. The euphoria is not only unfounded, the Third World is getting worse by the day.

Looking closely at the Third World—Brazil, Venezuela, Central America, Bolivia, Peru, the Middle East, India, Myanmar, etc.—one sees that all these countries are imploding. I struggle to think of a Third World country, with the exception of China, that is not getting worse. South Africa, Turkey, and Malaysia were once seen as among the best in the Third World. No more.

As democracy (read, mob-rule) has sunk its roots deeper in these countries, the psyche of the masses–who care for nothing more than bread and circuses–is increasingly getting reflected in their institutions.

I explore the above in details in my latest article, “the Future of the Third World.”

Following is an interview I did with Maurice Jackson about the above article:

On investments:

  • Novo Resources (NVO): Today after the close of the stock market, shareholders of NVO were treated to a confusing news release. As per the linked news, Newmont sold 11.8 million shares of Novo Resources at a price of C$1.60. Why did Newmont sell NVO for only C$1.60 when it was trading in the range of C$4?
    While a fuller truth will come out in a few days time, my view is—based also on some rumors I have heard—that Newmont had entered into a contract to sell NVO in July 2017, when NVO was in the range of C$1.60. When they finally concluded the deal yesterday they likely simply did not have the choice to sell in the open market. Even if by yesterday they no longer wanted to sell, their contract with the buyers likely forced them to conclude and sell. I am tempted to go with this version of the story, for it looks like a fuller response to the situation. It, for now, connects all the dots for me.
    I am sure there is more to the story, but I thought that the above might be of help to those who are mulling over Newmont’s sale of Novo shares.
  • FPX Nickel (FPX; C$0.09) has a very large Nickel project in Canada. They are currently drilling in an area that will likely improve the grade of the resources. FPX has a very tight share-structure, excellent management and a project that can make this company a ten-bagger. (From my ten-bagger list, NVO has made as much as 1,200%. IRV and AU have made more than 50%. I am now hoping for FPX to do the same.)
  • Thunderstruck Resources (AWE) is doing a financing at C$0.08 per unit. They have a large land-holding in Fiji. Their share-structure is very tight and the company is backed by some very well-connected people in the industry. This is an early stage company and hence very risky. I am participating in the financing. (Disclaimer: I intend to do a small financial consulting project for AWE, so take this information with a grain of salt).

Warm regards,

Jayant Bhandari

Associate: Rajni Bala


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