Liberty

Finished reading this one on the train ride to the FFH Dinner/AGM, and it was excellent! Highly recommended to those who still haven't picked it up.

+1000 :)

Isn't it what i said? It's not about tjust the rigs, it'a abouts the model. Though i'm not quite sure it's accurate to say that anyone can buy exactly the same rigs. There's a lot of in house r&d and manufacturing.

Um... I don't think the drilling industry works that way. No, but environmentally friendly frontier drilling in remote locations seems to.

I'm leaving tomorrow for Toronto (taking the train). See you guys there! I'll be the guy who looks uncomfortable in the crowd :P Stop and say 'hi' :)

Well, it certainly isn't turning to gold right now :P I'm not saying it's a magical company that is worth it at any price. But at the kinds of prices we've seen lately, I think it's a solid long-term investment that could earn quite a bit in any environment other than the junior depression we're seeing right now (and once they're done paying their earnouts to Bertram). One thing that gives me some confidence on the energy side is that they've recently signed very large multi-year contracts, and are bidding on more, and have said they're planning to start operating during times of the year when the company has not operated in the past. Bertram was already making good money before that, but this should help make things more predictable. On the mineral side, a lot of the secret sauce is like with soft drinks: branding/reputation and distribution. That's what is hard to replicate. At this point, Energold has spent years building relationships with a lot of the players and is synonymous with frontier drilling to them, and has a worldwide network of local drillers and helpers (that can't really be poached because they aren't trained on the more complex big rigs, but Energold can poach from other companies because its rigs are simpler to operate). Other companies usually fly the drillers in and then screw up the landscape by getting the big rig to where they need it. They could decide to get their own modular rigs and try to do environmentally friendly frontier drilling, but it would take years to build out the "distribution" network of local drillers and helpers, they'd need to change their model (Energold created that model and used it from the start, but others are used to the traditional way of doing things, and that kind of change is hard, especially as long as their traditional businesses make money), and would need to get the trust of mining companies that they can do this type of frontier drilling properly (that takes time too). It can be done, but there is definitely a barrier to entry, and so far it doesn't look like anyone is successfully even trying on any scale. It's probably easier for a startup to do something completely different than for a company that has been doing things based on one model for decades to change, and startups aren't much of a threat to EGD at this point. Their modular S-Style rigs started out not being able to drill very deep, but after many upgrades (another benefit of the modular model), they are now pretty competitive with most other standard rigs, afaik (don't remember max depth number off the top of my head). And many are being used for brownfield work by majors; in fact, EGD has trouble getting their rigs out of there because the customers want them to stay, so they usually end up building new more traditional rigs and swapping them over time to redeploy the S-styles to frontier work. I also like the discipline that they've shown so far, going after profitable business, not growth for growth's sake. Most other drillers have tons of rigs in Canada and Australia, but EGD stays out of these markets entirely on the mineral side because there's too much competition. The CEO is a large shareholder, so I think he's well aligned. You probably won't like that, but they also plan to start a water drilling division, mostly in Africa for municipal and UN contracts iirc. There too the main thing is their existing 'distribution' network and expertise working on those areas. Dando has like a 100 years of expertise in that market too. We'll see how it turns out, but Davidson so far seems to only go into places that meet his pretty high margin and ROIC requirement, so hopefully that's more of the same. A 4-division company could provide nice opportunities to allocate capital and resources across countries and divisions to where the highest returns are found.

Everybody's exploring in "frontier" markets now, including majors and intermediates, because they need big discoveries to replace their depleting mines, and they aren't finding them in the mature districts. That's where the big margins are, and that's what EGD's model is best at. I don't think they have. Bertram is within their core, which is drilling logistics (not building special rigs or whatever, it's a people and logistics business), and Dando (which they bought for like 100k + topping up their working capital) helps because they can do more R&D and produce more rigs in-house, and the model should be quite lucrative once they've sold enough rigs and the orders for aftermarket supplies start rolling in (it's like the car business -- much bigger margins on parts & services). I don't think Alberta will stop drilling even if oil prices go down, and it's probably the same in other places like North-Dakota and such. They are all looking at the very long term and even if some projects don't get built, the exploration is likely to continue. As I said above, the economics look pretty good, and at the price that they paid for the company, any profit at all is gravy. IMO he's an excellent CEO. The main thing that people seem to dislike is that he does some bought deals. Not ideal, I agree, but he's defended his actions pretty rationally, I think (it's in some conference calls), and so far history has shown that he's gotten good prices and that what he's done with the money raised has been very accretive. By not raising debt and keeping a lot of cash, he makes sure the company can get through tough times, make acquisitions or investments when others are desperate, and come out on the other side stronger, as he did during 2008-2009. He runs Impact silver too, which is a spin-off of EGD. Impact has built many silver mines in mexico all with internally generate cash, minimal dilution. Excellent cost controls and operations afaik, and a very large mining district where they've started to find gold-copper on top of the expected silver-lead-zinc. EGD owns almost 7 million shares of impact, which could someday be worth quite a lot (right now IMPACT is transitioning to new mines, but their long-term growth is impressive).

Yeah, the junior sector is mostly hot air. That's why it's much better to own the guy that sells them picks & shovels than own the juniors themselves. EGD can still make good money just from majors doing exploration and brownfield drilling (notice how the price per meter drilled in 2012 went up from 2011, at 188 vs 181 -- the softer results seem to have been in good part caused by rigs being shipped around and cancelled junior projects costing them meters, not by a collapse in pricing. I think that's a good sign), but when froth comes back in the junior market, they should profit handsomely. I think it's decently likely that in a few years the energy division will be bigger and more profitable than the mineral division, simply because of the scale of the industry. Peak mineral exploration expenditure worldwide was somewhere between 15-20 billion annually, while there are probably certain districts and projects on the energy side that get more than that by themselves. The only downside is that EGD doesn't seem to have quite the competitive advantage on the energy side that it has on the mineral side, but they can leverage the logistics of their worldwide mineral operations to help with expansion and find markets where margins are more attractive (they've already mentioned sending some of the geotechnical fleet outside of North-America, iirc), and even with full earnouts, Bertram will likely have been a superb bargain.

That was my feeling too on the debt, Steady. They got very good terms for most of it, so no hurry there. If the stock stays depressed, I'd be in favor of a buyback once thurso and the cogen are operating well, as long as they keep more than enough for LSQ's needs and a rainy day fund.

I'm no expert, but this feels like a sentiment thing. The mining market went from 'greed' to 'fear' and now that's feeding on itself. The fundamentals did get worse, but right now some things are priced as if nobody is going to need minerals ever again. Meanwhile, all these depleting assets are being mined out at rates faster than new discoveries are made, and since the juniors are gone, the majors now have to fund more exploration, but that's not nearly enough. Something's got to give at some point.

We might has well have a dedicated thread for this company. They just announced 2012 Q4 results: http://www.canadianminingjournal.com/press-releases/story.aspx?id=1002209927 Conference call is tonight at 4:30 PM. People looking for an intro to the company can start here: http://classicvalueinvestors.com/i/2013/01/interview-with-fred-davidson-from-energold-drilling-and-impact-silver/ http://www.aboveaverageodds.com/2011/08/09/energold-drilling-egd-cn/ http://adventuresincapitalism.com/search.aspx?q=energold The VIC also has a couple, for members: http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/17517 http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/56340 And then there's a lot of insights in these: http://www.energold.com/s/ConferenceCalls.asp

http://brooklyninvestor.blogspot.ca/2013/04/loews-2012-annual-report.html

The Greenberg saga continues: http://www.reuters.com/article/2013/04/08/us-aig-greenberg-idUSBRE9370QC20130408

http://www.bloomberg.com/news/2013-04-08/suntech-jumps-on-buffett-buyout-report-china-overnight.html

Closed above 40 for the first time since early 2011. Warrants up almost 6% too. Hopefully they get a chance to do buybacks before the price runs up too much...

No opinion on bitcoin, but this site's pretty cool: http://realtimebitcoin.info/

AFAIK states in the US where there's recourse were hit just as bad as the others. I don't expect a sudden crash, but I think prices will go down significantly (or wages will go up a lot, but that's a lot less likely).

Up to a point. You'd get diminishing returns past a certain level, I think.

Some short Reuters interviews with Ackman about Wachovia, Herbalife, JCP: Wachovia: http://www.youtube.com/watch?feature=player_embedded&v=f0NWtYP57jw JCP: http://www.youtube.com/watch?v=buPlL6Ke8Gk&feature=player_embedded&list=PLDACC00092C60E6B2 HLF: http://www.youtube.com/watch?feature=player_embedded&v=-lYcWRGymvg&list=PLDACC00092C60E6B2 Found via: http://www.valuewalk.com/2013/04/bill-ackman-one-of-my-best-buys-ever-took-4-hours-of-research-video/

http://www.greaterfool.ca/wp-content/uploads/2013/04/CHART.jpg

http://business.financialpost.com/2013/04/05/canadian-housing-downturn/ Signs of a Canadian housing downturn are everywhere

Unless I'm missing something, it doesn't look like Archive.org has crawled it properly: http://web.archive.org/web/20120407125808/http://msnbrkboardarchive.multiply.com/

Tesla has just announced a new way to finance its cars, kind of a hybrid between leasing and buying: http://ir.teslamotors.com/releasedetail.cfm?ReleaseID=753885

Exactly, Buffett's path was not optimal. My point is that to call him selfish is ridiculous. In the set of all possible paths, the vast vast vast majority are worse than Buffett's when it comes to philanthropy.

If we want to imagine scenarios, imagine if Buffett had donated all the money he made from his paper routes and subsequent endeavors to charity and never compounded it. Is that a better scenario?