This deal is a must-own for your portfolio…
But before I tell you what it is, I want to give you a sense of how big this really is: It’s exactly like being there for the birth of the offshore oil and gas industry.
This industry, born of the 1970s energy crisis, now produces about a third of the world’s oil output. But back in the ‘40s and ‘50s, it was still a frontier…a pipe dream, to many.
Geologists today know of some 115 billion barrels of oil and 633 trillion cubic feet of natural gas reserves in the Outer Continental Shelf surrounding America’s coastlines alone. There are some 450 operating platforms in the North Sea today, and several thousands in the Gulf of Mexico. It is a trillion-dollar-per-year industry, plus or minus.
Thanks to the mother of inventions, offshore drillers have overcome many obstacles (mostly political). And in the process, they have unwittingly laid the technical and legal groundwork for a whole new industry…
Until recently, offshore drilling had gotten a bad rap from both political parties. The ban on drilling was first made by George H.W. Bush and has stood until his son recently proposed repealing the ban.
Both candidates in the upcoming presidential election had been opposed to offshore drilling but have changed their stances in the recent weeks. Republican John McCain has stood by the president and called for an increase in offshore drilling. McCain attempted to drive yet another wedge between himself and his democratic rival.
But even Democratic Sen. Barack Obama has eased off his stance against drilling. Obama stated last week that he would support offshore drilling as part of a comprehensive energy plan. It seems that both sides of the aisle have felt the pressure of rising fuel prices. The winner in these new political concessions will clearly be the offshore drillers themselves.
So while the toughest obstacle is finally cleared for drillers, there could be a flood of opportunities made for investors.
There is one company I’m looking at. It is this industry’s leader. Its founder led the group that co-discovered the 40 million ounce Lihir gold mine in Papua New Guinea (put into production during the late ‘90s). He is still a founding director of Lihir Gold and a fellow of the Australasian Institute of Mining and Metallurgy. He surrounds himself with old mining hands, including former Placer Dome and BHP executives.
I bet you’ve already figured out that we’re talking about a mineral deposit.
What’s so new about that, right?
Get this: It’s under the sea. Yes, we are about to see the first major startup in the deep-sea mining industry. If it’s anything like the boom in offshore drilling, you’ll want to be there.
The world’s largest gold companies together own over one-third of this company.
These players are so bullish on the prospects of this industry they all entered into non-competing and anti-dilution clauses just to get a tiny foothold… Teck Cominco and Anglo American have paid millions of dollars for a mere option to participate in a potential future joint venture. And millions more in direct investments.
Anglo and Teck’s investments total more than $50 million.
Placer Dome alone spent more than $13 million earning a joint venture interest with this company.
And in 2006, shortly after Barrick took Placer Dome over, it decided to convert Placer’s JV interests into a 9.6% equity interest (which has since diluted to less than 5%) at a deemed price of $2.86 per share.
But wait, you may wonder, just how new is this?
Outside of a few dredging operations for diamonds off the African coast in recent years, the extraction of minerals from the seafloor is virtually untapped. No one has mined the seafloor, though geologists have long known of its potential…
For a long while, they thought that these minerals were deposited as sediments from eroding deposits on nearby land. But it was later realized that the source of massive sulfides on land was the ocean, and that hydrothermal events beneath the ocean seafloor precipitated into a mineral deposit upon contact with the water. In fact, in 1985, seafloor massive sulfide systems were discovered off the coast of Papua New Guinea by a research vessel at a site claimed by our company.
Given a few modifications to technology produced by the offshore oil industry over the last few decades, the outcome of a new international treaty on deep-sea mining in the ‘90s, advances made by our company toward the establishment of the first-ever deep-sea mine this decade and the growing worldwide demand for scarce mineral resources, the time is right for this industry to emerge…and the deep sea mining profits should follow!
August 13, 2008
P.S.: Advances in the offshore oil industry have aided operations for deep-sea miners. But these technological and political advances aren’t the only factors aiding the mineral mining industries. There are several economic reasons why mining stocks are set to soar. Readers of my Gold & Options Trader service already know this.
Ed is a former Howe Street broker. During the late ’90s, while many Wall Street firms were abandoning commodities altogether, Ed toiled for his clients on the Vancouver Stock Exchange. He was able to make his clients money even during the most vicious bear market for gold in the past two generations. Ed is now excited to take his skills and knowledge of precious metals and apply them to one of the biggest bull markets history has ever seen.
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