RE: RE: RE: RE: RE: Permiting Reality-Thanks MuchThis is from their annual report. So, when you say that they have not been approached by any major, are you suggesting that Hawkins is lying? And how do you know what is going on behind the scenes?
"We have therefore, during 2009, made substantial progress,and are well placed moving forward. The quality of our assets is increasingly recognized by the market and by our peers, and we have, during the last year, received unsolicited approaches from many of the major companies in our industry. However, we remain committed to preserving the upside for our shareholders until the true value of our outstanding portfolio is unlocked."
No, I'm not suggesting he is lying... I am only saying that the majors approach everyone with decent results -- of course, their results are more than decent -- but they are holding back on pushing for a JV or merger or takeover firstand foremost because of permitting questions.
The second point that you could clarify is this:
" Permitting in Indonesia is not the same as it is in any number of other areas of the world. ..."
Can you tell us how permitting differs in Indonesia from other parts of the world? And which other parts of the world are you referring to? Is there more red tape in Indonesia? Or is it just the uncertainty of the entire process that rankles? Or do you have some inside info on how the permitting process works in Indonesia (corruption that you may think is absent in other parts of the world?). Do you think most of the analysts even understand a country like Indonesia? For that matter do you think that most of the analysts have ever been on the ground in an emerging country? If I remember correctly, the analyst in the Canacrap report was getting most of the information from EAS management. If they had not mentioned the forestry issue to him then the report would have looked very different. Or, maybe, you think that the local villagers approached him and told him about the forestry issue. I doubt that the analyst would be able to find his way around Jakarta or Aceh in order to research the permitting issue. He got a guided tour of Miwah and he wrote his report based on the guided tour. This is typical of Bay Street. Do you think that the analysts on Bay Street, for example, when they recommend that we buy an emerging market ETF from China or India have any clue as to what it is like to do
business in these countries? Does that stop them from making their recommendations? I don't think you should compare the permitting process in Indonesia to that of any other country. Not when you don't know how it works. Or, if you do know how it works, please tell us and disclose your sources.
One of the ways that permittingdiffers in Indonesia is, for example, the fact that EAS may have an exploration license and even a mining license, but if they are operating on Forestry Department land, they can't go into production without forestry department permits. Also, as Indonesia has three classifications of forest -- the equivalent of a national park (no mining), a protected forest (no open pit for fear of erosion), and production forest (mining and other operations allowed) -- then EAS will have either to have the classification change (as Straits and Newmont had last year) OR they will have to have the area effectively re-zoned (from forestry use to mining use) OR they will have to have their project declared of such economic importance that senior government officials push it through. All three things are possible; none is certain. There are several different levels of government involved in each of these three cases. Some of these processes are bureaucratic, others are political. The list of differences is long. No, I'm not saying good, bad orindifferent -- only that they provide many challenges. It's harder to get permits in Indonesia than in Chile; tougher than in Columbia, Ghana, Brazil, Mexico... the list is long. (It's easier to get permits in Indonesia than in Venezuela and some would say it's easier than IN BC and Wyoming and Montana too.)
Meanwhile, you have inferred both that you think permitting is permitting is permitting... at the same time that you say you shouldn't compare permitting in one country versus the process in another. Another fine value-add. I've worked on permitting issues in Canada, the US, a few countries in Africa, across Asia (Indonesia, PNG and others) as well as in South and Central America. No, I'm not claiming to be an expert. But I am speaking from experience and not from a need to defend either my portfolio or my fragile ego.
I said I'm not shorting EAS and that I think they'll do well. Sorry you choose to ignore these facts.
You're happy to insult me: that's fine. You're happy to insult the analysts who look at these companies and project: fine too. In my experience, many of them are good, a few are very good and many more are lousy at their jobs. I speak with dozens of them every month, attend or lead analyst tours and try to use my knowledge and common sense to sort through the data. However, I'm sure that you are far, far more knowledgeable than any of us so, on behalf of anyone who's looking for objective insights and comment, thanks for setting us straight.