Wednesday, January 28, 2009

China is nervous but Obama is an Ox

Deeplode has returned from the Chinese New Year celebrations in Hong Kong where much fun was had. It takes more than a global meltdown to ruin the mood of the Chinese during New Year.
The fireworks were spectacular, the Flower Show at Victoria Park as well attended as ever and the restaurants were packed. The visits to the shrines and temples were as usual.
But underlying the celebrations were unspoken concerns about the year of the Bull...one certainly wouldn't articulate them during the New Year period but hope is replacing reality.
Indeed one of my friends who had been up in the southern province of Guangdong reported that a daily queue was forming every day in front of a giant replica of the Wall St. Golden Bull so they could touch it for good luck!!
Meaning the people feel more than ever that luck is needed!

However Xie Xuren, China's finance minister, did acknowledge the financial problems in his New Year greeting . The situation, he said, was now "very severe".
An unusual comment at this time of the year.
It indicates a nervousness amongst China's leaders about potential civil unrest which can spread like wild fire in some of the provinces.
The USA's current comments about manipulation of the yuan will not help ...indeed it was one of the factors in China and Russia attacking the USA this week as being the cause of the meltdown. The USA must be careful not to put themselves on the outer and at the same time giving reason for other countries to form "economic blocs". That we do not need.
Much will now depend on how President Obama handles relations with China and the Middle East. Russia needs some allies at the moment and it would be unwise of the USA to provide them with disaffected leaders of countries the West needs.
President Obama was born in the Year of the Ox and this could be very helpful in winning the trust of China.

Tuesday, January 20, 2009

The President's First Action

The first move of the new President must surely be to demand that banks which have received massive public money support through the rescue package immediately begin to LEND. This major function of banks has all but ceased even though the rescue package was built on a platform of expected lending.
The banks however are hoarding the money as squirrels do.
It looks as if the idea of an aggregator bank controlled by Washington is going to become a reality sucking up all the toxic assets littering the American banking landscape, freeing them from fear and getting them back to their primary function...ie capital flow.

But different to the long transition period between Presidents we will know within days if the new administration has the muscle to attack the banking crisis.

DeepLode is in no doubt that America is about to move!

And for a wide spectrum of views on this topic log onto hotcopper.com.au

Monday, January 19, 2009

A General Atomics Classic Power Play for Uranium

General Atomics ( the "famed Blue Brothers") through one of its subsidiaries Quasar has been patiently holding a share in the extension of its Beverly Mine in South Australia for many years.
It has been waiting for a friendly change in policy from the Federal Government of Australia. It now has that and as well a very enthusiastic State Premier .
Its prize is not its approved Beverly mine but an extension to that..The Beverly 4 Mile area..named because of its distance from the Beverly mine.The size of B4M has never been public information. But now its junior partner Alliance Resources is demanding just that.
Quasar (the legal Joint Partner)...Heathgate..General Atomics..the Blue Bros.. want to keep it private... AGS now wants to make it public for share price consideration, listing rules and to alert other big fish of its value so that Quasar has some opposition if bidding for this prized deposit commences.
So it is commissioning out of its own capital an accurate resource estimation of what the deposit holds.
The AGS Board is very savvy. Ian Gandel the major shareholder is an international developer of shopping centres , a keen mining entrepreneur in Australia and one of the country's wealthiest persons.
This is the beginning of a corporate play.....
Ian Gandel has made the first play because right now at current prices AGS is too cheap and too vulnerable.
So get the information into the public arena as quickly as possible.
Skilled negotiation and planned deal closure is the strength of the AGS Board.

And what about the Blue boys

Well
" Blue is a razor-sharp businessman, and interviews with dozens of Blue's associates and sparring partners suggest that he will do anything to maximize profit - even if it means violating agreements. And while some who have locked horns with him simply shrug their shoulders and move on, a few have taken him to court for breach of contract, fraud, and racketeering.
Blue admits to breaking contracts but won't comment on the rest."
(Fortune Magazine)

So a tough fight can be expected.After all he is on record as saying that the USA should have sent unmanned aircraft over Nicaragua on kamikaze missions to blow up the country's gasoline storage tanks. "You could launch them from behind the line of sight," he recalled matter of factly "so you would have total deniability."

WOW...He also owned the aircraft of course..the Predator

But my money is on Ian Gandel getting value for shareholders.

Opinions are those of DeepLode.. quotes from
http://money.cnn.com/2008/10/28/magazines/fortune/predator_gimbel.fortune/index.htm?postversion=2008103106


hotcopper.com.au
has an AGS thread which has it all...but would probably moderate some of DeepLode's speculation.

Sunday, January 18, 2009

It pays to be First in Senegal

As the global economy struggles to find some base from which to continue its growth small explorers are decidedly unwanted.But growth will return and energy requirements will increase. As we have seen even in the interim demand for energy remains strong and available supplies are under stress.
First Australian Resources’ prospects in Senegal, North America and China all have the potential to add serious value for its shareholders. DeepLode has written before on its fortuitous position in Senegal, and its already existing links with the Chinese, which could be a company maker for this minnow.Remember that analysts have estimated well in excess of 1 billion barrels for the Senegal tenements...and this could prove to be conservative.

The upside potential for the value of FAR certainly gives it a very attractive risk/reward balance.The income being derived from its North American assets continue and are not to be sneezed at in the current economic climate. Many juniors would be envious of any income.

DeepLode continues to rate FAR highly especially at such depressed prices.
Of course this is just opinion and for general interest.

Informed discussions can be found on hotcopper.com.au (a classy mining forum here in Australia)

Saturday, January 17, 2009

Senegal Natural Resources Attracting Attention

Although Senegal is facing economic difficulties international interest is, if anything, increasing. France has recently agreed to lend the Government $US165m to pay down its debts to local entities.
This is on top of the considerable input from China that DeepLode has identified in previous posts. Senegal has undeveloped resources including the offshore oil exploration tenement now under the leasehold of First Australian Resources.
Foreign interests want to keep the Senegal economy alive and kicking to protect their existing interests and to get a foot in on new developments...and they will come!

Analysts report that economic growth should recover to something like 5.5 percent a year between 2009 and 2013.
Last year's $100-million injection into phosphates production by Indian interests has helped enormously.

Although a minnow on any scale FAR suddenly has a trump card. Follow with interest!

Wednesday, January 14, 2009

China's African Oil Diplomacy and A Small Australian Oiler

China resumed diplomatic relations with Senegal back in 2005. Since then it has lent it, on very good terms, something like $US161 million dollars. The latest loan was just this month (Jan 7th) for about $US80 million dollars.
It also recently signed a trade deal with Senegal reducing import tariffs on goods from Senegal to zero.It also announced in 2006 that it would spend $US35 million building West Africa's biggest cultural theatre in Senegal. At the same time it announced debt relief of some $US20 million.

So what has that do do with the tiny Australian oil explorer First Australian Resources?
Recently a huge oil exploration tenement in Senegal fell into the hands of FAR when its 60% USA partner, Hunt Oil, unexpectedly pulled out of the joint venture. It gave no reason and being a private company it does not have to.
This posed a problem for FAR as the lease on the tenement was also about to expire.
But against all odds the Senegal Government approved the passing of the tenement to FAR and immediately extended the lease for another 12 months to enable FAR to find a senior partner to fund the drilling at a cost of about $US60 million for the first well.
The tenement is ready to drill as over the past year or so $US20 million has been spent identifying targets.
Now Deeplode makes no assertions about this scenario...readers can do that themselves.
But this situation sure looks interesting.

Monday, January 12, 2009

Egyptian Government at risk

The Egyptian Government may not survive the backlash of its people against its support for the Israeli attack on Gaza. DeepLode has written on this topic before and expressed concerns for Egypt's stability post Gaza. Even if Israel comes out on top of the current unrest it and Egypt are at risk of years of insurgent attacks from beyond Gaza.
In my opinion any short term gains won, at an appalling human cost, will be just that............ short term.
As well, in DeepLode's opinion, Egypt's octogenarian President Hosni Mubarak and his Government will not survive.
And investments in Egypt are at risk. One in particular is the joint venture between Tantalum Egypt and Gippsland Limited.
Directors of GIP advised recently that the Abu Dabbab project's definitive feasibility study has been reviewed and that the total capital expenditure will amount to US$173 million, an increase of US$48 million over the previous November 2007 estimate.
Also they are hoping that the Egyptian Government will rebuild Port Turumbi an old unused port close to Abu Dabbab (mind you the road network is non existent as yet also).
This is just one example of projects facing funding difficulties in Egypt.
Development Banks have already contributed to this project with no progress seen and private equity is on the back foot.
One can only hope there is a turn around.
There is a very interesting GIP thread on hotcopper.com.au...a site worth visiting!
DeepLode hopes Gippsland gets its project off the ground..It could be massive...but another partner is badly needed.

Thursday, January 8, 2009

Agents Provocateurs

The rockets coming from Lebanon into Israel do not carry a message of peace.There is every possibility that they are being fired and funded by agents provocateurs who want to escalate the current war, and I use the word advisedly, into a wider Middle East "incident."
Iran has a motivation to do just that before the Americans get their act together because of their clumsy inauguration process.
We know Iran controls supply lines to Hizbollah so join the dots.
Deeplode has been concerned since the start of this conflict that Iran would find a way to be involved.
It may now be involved.
Danger indeed!


The Inauguration Gap is Too Long

A poster on the very popular and informative forum hotcopper.com.au has suggested that
"The reason there is such a long interval between the election and the inauguration of a US president is so he/she has enough time to ride a horse from the other side of the country to Washington."
Very romantic ...I like it...and it is partly true..it actually used to be twice as long because of the slowness of transport..
It was amended in 1933 because of the then financial crisis!And in this current crisis ridden world the gap seems an extraordinarily long time for the American political processes to be all but paralysed.

But there is another reason as well. The American system unlike our Westminster system has no provision for a shadow cabinet . The president-elect needs time to select his cabinet members and all those other executive roles which are a feature of US governance. And all then needs to be be confirmed by the Senate. So time is needed...and right now time is short.
Perhaps something to be said for our system where the alternative government is ready to go immediately..and does!!!
I am sure the current gap will be under review in the USA

Saturday, January 3, 2009

Taiwan and China reach out across the Straits.

I was present at an interesting lunch yesterday to celebrate the birthday of a Hong Kong friend. I was sitting next to a Taiwanese businessman who has interests in Australia, Hong Kong and London.
Our conversation turned to the warming of relations between Taiwan and China. In general he was quietly supportive but clearly had some reservations. With journeys shorter by 90 minutes, businessmen and travelers are finding it easier to get across the straits.Up until the direct air connections were established a week or two ago if he needed to go China on company business he used to travel via Hong Kong and Macau. But now he is able to fly direct to Guangdong Province, reducing the traveling time by more than an hour. He pointed out that as well as shortening the travel time and distance there is a saving of eight tones of jet fuel. Ah! The minds of businessmen.
Of course it is not only business travelers who are pleased about that….family visits, holidays etc are now much easier with over 20 destinations in China being served and direct postal and freight services also commencing.

So everything is fine?
Well not really. It was explained that significant sections of the Taiwanese people are concerned that President Ma and the Kuomintang Party (KMT) are just a bit too close to the ruling group in China. Taiwan is historically fiercely independent, and with the strong backing of the U.S. has always kept a wary eye on the military power of China. Approaches from China to engage in joint military exercises, in return for reducing the number of missiles pointed at Taiwan are being greeted with much suspicion by the Taiwanese people. Interestingly the businessman’s son was also present and is about to start his compulsory National Service. He was clearly very positive about this and was adamant that Taiwan must maintain a separate and alert military.
The other concern expressed was the KMT’s increasing moves to control and censor both the printed and televised news services.
Apparently during this week thousands of people protested in Taipei against a draft motion that would enable the government to control the public television's news coverage and programming. The view at the table was that this could just be the thin edge of the wedge and that the Taiwanese people were not going to surrender any of their hard won freedoms.
Anyway we will watch with interest and after many toasts…which I have learned to cope with by taking very small sips…the lunch broke up.

Friday, January 2, 2009

Saudi Blames Hamas

Saudi Arabia seems to be blaming Hamas for the continuing attacks on Gaza according to news reports coming out of the Middle East and Europe (The Guardian is one news source reporting this but it is also on general news wires. )
This seems to be a clear indication that the shaky Arab League is again under pressure and that Saudi Arabia is not going to be part of any extreme Arab League action.
Turkey seems to be playing a key role in these new developments offended by what it sees as Israel’s dishonesty when their PM met with Turkish PM Erdogen on Dec 22. It seems that Israel, not surprisingly, set up a decoy position in the talks.

Saudi is saying that Hamas must resume talks with Fatah before the Arab League can give support..
"This terrible massacre would not have happened if the Palestinian people were united behind one leadership," Saudi foreign minister, Prince Saud al-Faisal is reported as saying.

Hamas of course attacked the Arab League position as "pathetic" and further is saying that Fatah is providing intelligence to Israel itself. That is a serious division.

But maybe these divisions are no greater than those in the Arab League.
Some want an immediate summit others do not eg Syria and Qatar want one whereas Saudi and Egypt do not!..Now I am sure readers can work that out!!

The biggest danger is that the Arab League may renege on the Arab Peace Initiative of 2007 in which Israel is assured of the recognition of all Arab entities if it accepts the 1967 borders and recognises an independent Palestinian state.
Turkey’s significant role is evidenced by its PM taking on a whirl wind tour of Middle East states
Syria and Jordan today and tomorrow to Saudi Arabia.
In Jordan he also met with the Palestinian President.
His intent is clear..he is quoted on the news wires as saying "Developments in Gaza are very dangerous developments to which we cannot remain silent both in regards to humanitarian reasons and to regional peace and stability. Turkey has been deeply concerned over the humanitarian tragedy in Gaza and the fact that the Middle East is entering a spiral of violence. The goal of the regional tour upon which we embarked today is to help end this dangerous course of events."
The divide between the hard line states and the Western allied ones is becoming greater and the atmosphere more tense. And of course as protesters are flooding the streets the divide between the “soft line” states and their populations who want action is also becoming greater. The Middle East is on edge tonight.

Sources: monitored newswires. Opinions are mine.