Exploring for, delineating, and mining ore bodies is an extremely tough business. The success rates for going from a discovery through to positive feasibility through to first production (and actually making money on this process) are right of the decimal point.

To paraphrase Thomas Edison, there are literally thousands of ways to not come up with an economic mine.

A lot of people are learning this the hard way.

With metals having become one of the hottest sectors on the planet this year, new players are entering the business by the score.

On my recent visit to Toronto I heard about Korean conglomerates with mandates to get into mining ASAP.

Talking with a friend in the uranium business this week, he noted that a number of major mining companies have been showing up, look to enter (or in some cases re-enter) the uranium space by acquiring or joint venturing projects.

I also had a sit-down last week with a large investment fund run by several Fortune-magazine caliber names who believe that gold is going to be the winning investment of the coming decade.

This is a lot of financial and corporate firepower being brought to bear on the mineral industry. But there’s one thing many newcomers lack. Experience.

Companies that got into mining over the last few years are starting to realize just how difficult this business is. In South America, a number of major deposits purchased by overseas firms as an entry into copper and gold are sitting idle. Because their new owners lack the geological, engineering and project management skills to move the projects forward.

Those companies are realizing they need help. From people who know the mining business.

And those groups are now seeking out help. Doing deals with experienced firms not only to gain access to specific projects, but also to tap into the operational expertise of companies that are tops in the business.

This week, for example, it emerged that Aluminum Corp. of China (better known as Chalco) is in advanced talks with Rio Tinto on a number of strategic partnerships.

This is a good deal for Rio, as Chalco brings considerable cash and political clout to the table. And a great deal for Chalco, giving them access to the brain trust of the world’s second-largest public mining company, a group with a proven track record of developing projects.

Going forward, those teams with mining know-how are going to be a hot commodity. Knowledge is one thing that’s even harder to find than a major mineral deposit.

Here’s to beautiful (and profitable) minds,

Dave Forest
dforest@piercepoints.com

Copyright 2009 Resource Publishers Inc.

Note:

The information provided in this newsletter is based on the independent research of Dave Forest and Notela Resource Advisors Ltd. and is intended solely for informative purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade any securities or commodities named herein. Information contained in this newsletter is obtained from sources believed to be reliable, but is in no way assured. All materials and related graphics provided in this newsletter and any other materials which are referenced herein are provided “as is” without warranty of any kind, either express or implied. No assurance of any kind is implied or possible where projections of future conditions are attempted. Readers using the information contained herein are solely responsible for verifying the accuracy thereof and for their own actions and investment decisions. Neither Dave Forest nor Notela Resource Advisors Ltd., make any representations about the suitability of the information delivered in this newsletter or any other materials that are referenced herein for any purpose whatsoever. The information contained in this newsletter does not constitute investment advice and neither Dave Forest nor Notela Resource Advisors Ltd. are registered with any securities regulatory authority to provide investment advice. Readers are cautioned to consult with a qualified registered securities adviser prior to making any investment decisions. The information contained in this newsletter has not been reviewed or authorized by any of the companies mentioned herein.

Be patient, sit tall, and look for an opening.

And when you see one,

Fly through at the speed of light.

By Andrey Dashkov, contributor, Casey’s International Speculator

For many investors, Colombia remains a grey spot on their mental maps of South America.

La Violencia, the 50-year dark age in its recent past, came to an end with the close of the 20th Century. But the memories are fresh, and the impact on the local economy and international perceptions of the country lingers. This reputation still prevents most foreigners from investigating Colombia’s potential – and that spells opportunity.

For those contrarian enough to see Colombia as a new frontier, early speculations are starting to yield big rewards. The country has abundant natural resources, including gold, silver, copper, coal, oil, gas, and more, a good deal of which remains underexplored.

But is it safe to explore for gold in a place distant from other relatively stable regions and drill in areas formerly held by AK47-toting guerillas?

The country is still far from being as secure a place for mining companies as some of its Latin American peers, like Mexico or Chile. That said, our own Louis James visited Colombia in ’08 and ’09 and saw marked improvement in the country. Kicking rocks in remote areas formerly controlled by the infamous paramilitary groups advancing their Marxist ideals, he saw scars left by the violence, but no sign of any current danger.

The critical factor is that there is huge support for President Alvaro Uribe, whom Colombians of all political stripes credit with ending the violence and jump-starting the country’s economy. Uribe’s second term will end this year, and he will not be able to serve a third. But it appears highly probable a hand-picked protégé will get his nod for election, keeping Colombia on the path to recovery. Our local contacts tell us most of the candidates are making efforts to be as “Uribe-like” as possible.

Indeed, as many of its neighbors have made hard Left turns, Colombia is rapidly becoming a bright spot in Latin America with its more free-market approach to its economy. Uribe’s support of private initiative and market institutions, evident in the reforms he engineered, has resulted in impressive economic progress since he took office. Let’s take a brief look at the numbers.

As you can see, the Colombian economy has fared better than its Latin American peer group. Much of the growth was sponsored by foreign investment, the rate of which decreased as the liquidity crisis unfolded. Nonetheless, foreign investment sows the seeds of future growth, as opposed to foreign aid, which simply wastes money and fosters dependence. Uribe has done a good job in this area, attracting US$8.6 billion gross foreign direct investment (FDI) in 2009. More than a third of total 2009 FDI in Colombia was in the mining sector, and almost another third was in the oil sector.

Another indicator of things turning around is the increasing flow of tourists to Colombia. In 2009, the country attracted more than 1.3 million visitors, outpacing its neighbors by quite a margin.

More business means more jobs. Although almost half of the country’s population still lives below the poverty line, the situation has been improving since 2002.
Colombia has been recognized as one of the best pro-business reformers globally in recent years by the World Bank. We’re not big fans of the World Bank here at Casey’s International Speculator, but the striking performance of Colombia in its most recent “Doing Business” report probably means something.

Colombia’s international ranking improved by a whopping 42 positions from 2007 to 2010, far beyond the improvement of any other Latin American country.

Another relevant indicator taken from the Doing Business report is the “Investor Protection” parameter. Good news for Colombia: the country is rated fifth globally, leaving its peers in the dust.

These, and other, indicators make a good case for Colombia. The country is gaining economic stability, and new legislation provides foreign investors with a high degree of legal protection and security. Uribe’s approval rating, reported to be as high as 97%, is another major plus.

There has long been a “Colombia discount” applied to the stocks of companies doing business there, but that’s fading fast. Companies are starting to get a boost in share price just for saying they are exploring in Colombia.

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However, unlike other “flavor of the day” plays, there is good reason to expect the Colombia Gold Rush to last. The country really is highly prospective for all sorts of natural resources, and, due to La Violencia, has lacked exploration for decades. In other words, this is “low-hanging fruit” that is not picked over. And as each significant discovery is made, it will add to the premium the market gives Colombia plays.

So, our take is that in spite of the danger of a near-term correction, it’s time to examine the most interesting opportunities in Colombia and make sure we have some of the best of the best in our portfolio. Actually, if there is a correction ahead, it could make for fantastic opportunities to load up at pre-gold rush prices.

Regards,

Andrey Dashkov

Editor’s note: Casey Research is the most “plugged in” commodities and mining research firm in the world… and their International Speculator is one of the best mining stock advisories you can find anywhere, for any price. If the sovereign debt crisis causes gold and silver to climb further, the small precious metals stocks covered in International Speculator will explode in price… many by 500% or even 1,000%. To learn more about a risk-free trial to this publication, which is the “insider’s way” to play gold and silver, click here.