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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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Copper And Oil Mega-Plays... In Exactly The Same Place

Back from another tour of duty the last few weeks -- this one including stops in Colombia, Thailand, Myanmar and Hong Kong.

And everywhere there were interesting opportunities to be had.

One theme jumped out from all the meetings worldwide: that resource markets are facing some of the toughest times in decades right now. At least in the West.

Many of the Western investors I met with have turned negative on gold, base metals, and now even energy. Some formerly major players in this space have turned away from financing resource projects altogether -- now preferring more popular stomping grounds like the technology sector.

But at the same time that the West is turning away, the East is coming on. Related: How Much Longer Can The Oil Age Last?

The message I got loud and clear was that Asian firms -- and especially government-backed entities -- are driving harder than ever to find quality resource projects. Both in energy and metals. These conglomerates have a lot of cash on hand, and these days they're deploying it -- not just into advanced assets, but increasingly into exploration plays aimed at discovering, rather than buying, the next big mine or oil field.

Just look at the $20 million project financing package that was struck earlier this year by British Columbia copper-gold developer Serengeti Resources -- with the backing coming from a major Korean trading company (arranged by Harp Capital, a boutique firm who have been on the front lines of Asian resource finance for nearly a decade). Today Asia is where the money is coming from.

That combination of Western malaise and Eastern attention is setting up some interesting dynamics. In fact, it makes this a near-perfect time for certain projects. Related: How China Could Hold The Oil Markets To Ransom

That's because the lack of love from traditional markets is making it easier to source projects right now. On the South America leg of my trip, for example, I was able to meet on four to five copper projects daily -- many of them at an advanced stage. These are the kind of opportunities that simply weren't available three years ago. And today they come with much-reduced price tags. If you like paying pennies on the dollar, this is the time.

The same is true on the oil and gas front. During my meetings in Colombia, I heard reports that even the government in this stalwart petroleum-producing nation is fatigued over its project portfolio. In fact, insiders told me that state oil and gas firm Ecopetrol is looking at spinning off dozens of state-controlled oil fields to the private sector soon.

That's exactly the sort of opportunity that's created huge wins in the past. The trick of course being that developers need to finance amid the current challenging markets. Related: Germany Getting In Early On This Major New Oil And Gas Opportunity

In that regard, there was one meeting on my trip that particularly stood out. A former petroleum engineer with the Colombian government -- who noted that the government is now, for the first time, offering oil and gas acreage in a totally new part of the country. A place that is unique in having access to the Pacific Ocean -- and thus to energy markets in Asia.

This is the kind of opportunity tailor-made for today's markets. Where industry indifference is making acreage available (at very low cost) -- in a place that's a natural fit for cash-rich Asian firms looking to secure oil supply.

My trip has left me excited about new kinds of projects -- and project finance -- we're going to see in our market going forward. For those who position on the leading edge of the sweeping changes we're seeing now, the coming years are going to be unlike anything previous.

Here's to a global opportunity,

Dave Forest

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