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John Polomny
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John Polomny is an individual investor and speculator seeking unique, overlooked, and well researched opportunities and speculations from all over the world.
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  • Rick Rule Updates View On PGM's



    In South Africa, Rick believes labor disputes will plague the industry until big miners are simply forced to shut down. These strikes and violence are symptoms of how harsh conditions have become in platinum and palladium mines as they go ever deeper to produce ore. These companies still generate insufficient cash flow to pay their workers well.

    The strike itself is a result of the fact that the industry does not earn enough at current platinum and palladium prices. So the miners can't earn a living wage. Both sides are stuck between a rock and a hard place.

    There are two competing unions vying for the affections of workers. Neither of these can change the underlying economics of platinum production. In fact, both probably view the workers as tools to a political end, rather than a constituency to be served.

    The strikes are really an illustration of the industry itself. If platinum and palladium prices do not rise, mines will close down and workers will be unemployed. There is no way to maintain production rates without sustaining capital investments, but you can't make those investments without being profitable. Thus, the price has to go up to maintain current production.

    The bottom line is that most of the mines in SA are simply too high cost to continue producing at current pgm prices. The unions in SA do not realize this as they have their judgment clouded by political concerns. If the mining companies agree to the doubling of entry level wages they will have to shutdown shafts. If they do not agree they will have to shutdown shafts. Regardless, the high cost production will have to be put out to grass and that will cause a price rise which will eventually stimulate investment in mines. I continue to like Sylvania Platinum as they have no mining risk due to the company being a processor of old mining dumps. As the pgm prices rise they will benefit as their production is relatively low cost, they have completed the majority of their capital spending, and they are optimizing operations and lowering costs. Yes the company is in SA but it has not been affected by much of this labor unrest.

    Disclosure: I am long SAPLF.

    Apr 06 11:20 AM | Link | Comment!
  • Ukraine Energy Markets And Prospects

    Article on prospects for Ukraine energy sector by Robert Bensh. Mr. Bensh is an advisor for my 2014 stock of the year pick Cub Energy.

    There is only one certainty in Ukraine: The energy sector must and will be transformed, and how long this takes will depend on who ends up in the driver's seat and how serious they are about becoming a part of Europe and reducing dependence on Russia. But by then, investors will have missed the boat.

    The driving factor for any energy investor in Ukraine is the pricing environment. There is nowhere else in Europe--or some would even argue in the world--where you are going to get significant access to resources and potential resources for the price. Gas is selling at $13.66/Mcf, while it costs $4-$5 to produce and operate. That means producers are netting anywhere between $8 and $9/Mcf.

    Whether it likes it or not, kicking and screaming, Ukraine will have to transform its energy sector, if it hopes to see promised IMF money. Kiev will have to start selling off assets and making the industry much more transparent. Greater transparency coupled with an already-favorable gas price environment, will make Ukraine one of the best places to be over the next 5-7 years.

    This is probably good for Cub Energy long term as they already are operating in Ukraine and have relationships with the decision makers in Kiev. In the interim the discounted gas from Russia has run out and gas prices have reverted to there previous higher levels. This of course benefits Cub Energy as they continue to increase production inside Ukraine.

    Disclosure: I am long TPNEF.

    Tags: TPNEF
    Apr 02 9:46 PM | Link | Comment!
  • New CEO Of Mongolian Growth Group Addresses Shareholders

    Link to letter:

    I have spent some more time thinking about the appointment of Paul Byrne as the new CEO. After reading the letter to shareholders I have a couple of thoughts. First of all the guy leaves a plumb job to come to UB as he sees the opporutunity and compares it to other places that enjoyed huge increases in building and real estate. I also think he has quite a few contacts with knows people with money and I would expect that he will be able to bring deal flow to MGG. From the sound of the letter he is talking about MGG leading the complete development/re-development of the Central Business District in UB. I also like the fact that he bought $250k worth of stock with his own money. It appears thee will be some time for him to get his sea legs and than I expect a lot of news flow and deals. Hopefully the OT saga gets resolved and FDI begins to pick up later this year. The market has liked the news as the stock has popped nicely. I have been accumulating shares over the last year or so and I will continue as I believe this is one of the best opportunities in the entire world.

    Disclosure: I am long MNGGF.

    Tags: MNGGF, Mongolia
    Mar 30 11:25 AM | Link | Comment!
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