Fellow Investors,

for those readers who perhaps think that I have exagerated the labour problem facing mining in my last post. Here is Scott Wrights thoughts on it, the rest of his article can be found at www.zealllc.com.

/And speaking of commodities, labor has become a hot commodity in the mining industry.  Not only are the blue-collar laborers that get their hands dirty harder to find and commanding greater compensation, but the skilled white-collar positions have been extremely hard to fill.

The reality is mine engineering and geology have not been sexy areas to study in the last several decades.  When you combine a commodities bear with the technology revolution, there has been little incentive for those entering the global workforce to attain higher education and training on rocks.

When I was in college the low-level geology courses only attracted the football players, “rocks for jocks”.  And those few that actually pursued degrees in this field were destined to flip burgers for a living.  Well today things are quite different.  Trained geologists, mining engineers, geoscientists or any type of mineralogists are truly hot commodities.

These folks, especially the experienced ones, hold all the cards when it comes to employment negotiation.  They can literally write their own compensation packages.  There is such an incredible shortage of these skilled workers that mining companies must shell out big bucks to attract and retain such talent.  Unfortunately many projects around the world are delayed due to labor shortages, both blue-collar and white-collar.  These problems are indeed a factor in the global gold production shortfalls./

While his observations match my experience almost exactly I believe he understates the difficulty in finding experienced, competant blue collar workers as well. I am well aware how difficult it is to find and retain these individuals because I straddle both the blue and white collar positions in a mine.

Therefore as an exploration company with no exhisting mining workforce to draw from ARU is not in a very good position labour wise to develope this mine by itself. Starting new mines from a labour stand point is proving difficult for those established major miners let alone a start up. This is not to mean that it cannot be done and will not be done if a very lucritive take over offer is not given. It just means contrary to what Ghostbuster posted that the best deal for all those concerned is a take over of FDN. This would statisfy those who wish to move onto other investment opportunities and for those who wish to hold the company that takes over FDN they can be free to do so. Even now FDN ounces would add significant value to any major, the eventual number of ounces at FDN will be 2 - 4 times what they have reported to date in my opinion.

The ARU spin off can continue on to do what as geologists they do best, explore for more deposits on there land package, no doubt well financed and with many past investors jumping on board once again. ARU management did not add all the takeover specialists to the company if they were not seriously considering selling off FDN. I give ARU about a 5% possibility that they decide to develope the mine itself.

ARU now represents about 60% of my investment porfolio and I am not concerned one bit and have never been concerned even when the share price was down 30 - 40% from its highs. For those investors out there that beleive in a well diversified porfolio consider this, the wealthiest people to day and in the past did not make there fortunes by being well diversified. They made them by being in the right place at the right time and betting heavily on that sector whether it be the oil barrons, shipping tycoons, lumber barrons, railroad barrons, real estate tycoons, arms dealers and tech developers. These billionaires did not start out with well diversified porfolio's hahahahahahaha.

Diversification is pushed by financial institutions because they know that not everyone in the markets can be in the same sector or sectors at once. They have to push the whole market in order that they can make commissions. They will be pushing the whole markets and saying everthing is ok right up to the bitter end just as they have done during every crash in history.

Once again here is what Warren Buffet thinks about diversification & some other noteable qoutes of his investors should consider seriously.

Wide diversification is only required when investors do not understand what they are doing.

A public-opinion poll is no substitute for thought

If past history was all there was to the game, the richest people would be librarians.

Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.

Price is what you pay. Value is what you get.

Risk comes from not knowing what you're doing.

Why not invest your assets in the companies you really like? As Mae West said, "Too much of a good thing can be wonderful". 

My two favourites are:

There seems to be some perverse human characteristic that likes to make easy things difficult. 

simply attempt to be fearful when others are greedy and to be greedy only when others are fearful. 

F.F.