One Of The Best Things To Happen To Mining Since Dynamite
How does one buy something that they don’t even know about?
The answer: they can’t.
I do not believe that demand creates supply – but that the supply creates the demand (Say’s Law).
“Say’s Law” was authored by a French economist from the late 1700’s / early 1800’s, Jean Baptiste Say.
Simply put, the law states that:
“If a businessman produces a good, then he will be keen to sell it. This production creates wages for workers and income for the businessman. Therefore, the production has increased wealth and leads to demand for other goods [employees now have their pay checks to go spend on others produced goods].
Jean Baptiste Say argued it was irrational to hoard money because ‘we are most anxious to sell it immediately, let its value should diminish in his hands‘ i.e. inflation may reduce the value of cash. This theory assumes that all businessmen produce goods that are demanded by the market.
Another point should be made about supply creating demand. People naturally have infinite wants and needs. If it was up to them, they would have everything. But one has to show them what they will want.
Person A: Wouldn’t life be easier if we could communicate with a friend across the country immediately and hear their voices, not with written letters?
Person B: What? How is that even possible? If we do not use letters, than how would someone contact us from afar?
*Person A pulls out a cellphone*
Person A: This device allows someone to speak with someone from anywhere and immediately. You hit dial, it rings on their device, and they pick up and both of you can have a conversation in real time. It fits in your pocket and you can call them whenever you need or like. Its called a cellphone.
*Person A goes on to explain the frequencies and radio waves and other highly complicated science that allows us to create such amazing devices*
Person B: I cant believe this – it is absolutely amazing. I want one right now. I have no idea how it was created or any of the technical stuff you told me, but now that I see it I realize I need it desperately.
Something has to be created which people can comprehend and understand how to use it. Today, global economies are rich with all types of goods and services created by the investments and creativity of entrepreneurs for the consumers.
With that being said, the question now is: how can someone invest in a company they don’t know of yet?
They have to keep their eyes and mind open.
Nippon Dragon Resources (RCCMF) is a Canadian company that no one knows about, but the ones that do, find it are very excited.
Popular investors, Peter Krauth, had written an article titled: “The Biggest Thing to Happen to Gold Mining Since the Shovel“ about the company and highlighting its potential.
The company’s “thermal fragmentation” approach will be as disruptive to mining as fracking has been to oil and gas… except that it’s highly environmentally friendly, says Peter Krauth.
The company has a patented mining technology. I gave an in-depth analysis of the company and its process inmy previous article.
As of recently, gold producer Anglo Ashanti (AU) gave a very interesting speech regarding their new technology process and the “pleasing” results it’s showing. It is using a thermal fragmentation – this is what Nippon’s patented process is about.
JOHANNESBURG (miningweekly.com) – The innovative technology project being undertaken by gold mining company AngloGold Ashanti was continuing to show “pleasing” progress, with the successful deployment of the company’s latest generation reef-boring machine at the company’s TauTona lower carbon leader shaft pillar.
With current conventional mining methods, much gold is either destroyed by dynamite blasts or they cant reach it, or it is left behind. In South Africa’s case, about 60% of gold (60/100 grams) is accessible while 40% (40/100 grams) is left behind. And that is much more than a lot of money being left behind.
Adding insult to injury for shareholders, of that 60%(60/100 grams) that is accessible, roughly 50%(25-30 / 60 grams) of it is destroyed by using modern drilling technology and method because blasting dynamite destroys some of the gold and breaks/scatters the ore all over, sometimes into even powder, that some of it cant be gathered.
One hundred grams of gold in the ground becomes 30 g or 25 g of gold on surface[amount that makes it out of the mine], after getting out only 60% of what was there in the first place.
The dynamite blast method is extremely dangerous. It isn’t hard to come too a conclusion that the mining sector needs investment in new technology.
Nippon’s process is just in time (most likely 10 years late, but better than never) as the low hanging fruit of the global mines are gone. The easy to grab and accessible gold has been taken, now miners must dig deeper and blast farther for lower grade gold – an extremely expensive dilemma.
Peak gold production has been reached, which has mining companies either filing bankruptcy or lowering expansion and output. They must adapt using smarter and more efficient mining methods to lower expenses.
QMX Gold Corp (QMXGF) wised up and as of recently, their mine is the first in North America to be using the thermal fragmentation process of Nippon’s.
Supply creates the demand. Now that investors (and shareholders of companies such as QMX and Anglo Ashanti) know about thermal fragmentation process and Nippon Dragon Resource, they can demand it for themselves.
Contrarian and Austrian - Value Investing Ideas - Anti-Government Philosophy - Author.