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Dave Forest

Dave Forest

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

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Do You Have An Investment in This "Golden Corridor"?

The development of big infrastructure projects is alchemical in the resource business.

The construction of a new road, rail or powerline can turn a valueless stranded deposit into a billion-dollar enterprise nearly overnight. There's thus a lot of money to be made by watching the unfolding of global development projects in resource-rich nations.

One place on Earth right now is shaping up as a "golden corridor" for such wealth creation. The so-called Southern African Customs Union. Including South Africa, Lesotho, Swaziland, Botswana and Namibia.

As regular readers know, I'm a little dubious lately on the outlook for South Africa. But the potential in the northern part of the Union looks excellent.

Things got even brighter last week with the announcement in Botswana newspapers that a "Trans-Kalahari" railway is going to tender (thanks for the heads up, John).

The paper quoted Namibian National Planning Commission Permanent Secretary Andries Hungamo as saying that a bilateral agreement between Namibia and Botswana will be signed soon for the rail project. With a call for construction tenders issued soon after.

The project's primary purpose is to link coal fields in eastern Botswana 1,500 kilometres westward to the Namibian port at Walvis Bay. Construction could commence in 2014, according to the Secretary.

This would be a critical development for resources in Botswana. Not just coal--which has long been stranded with few options for export. But also for other resources like iron and copper concentrate, which Botswana has great potential for.

The new rail would also benefit projects on the Namibian side. Especially in concert with the recently-announced Ressano Garcia 122 MW export power line to Namibia from Mozambique that we've discussed before as a major driver for this region.

With all of these positives shaping up, the Namibia-Botswana +/- Mozambique corridor is a place to start seriously looking at projects. The geologic potential is certainly there. (Witness the presence here of savvy resource investors like Cupric Canyon. The company was formed in 2010 by ex-senior management from Freeport-McMoRan/Phelps Dodge--with major financial backing from Barclays--to seek out copper acquisitions globally. In three years, this copper "dream team" has done just one deal--in Botswana.)

For early-in projects owners here, things look to be shaping up golden.

Here's to laying them rails,

By. Dave Forest




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