Ten years. The next ten years will be the bull run for gold, and no one will expect the gold price to almost reaching 1,900 USD per Ounce.
That’s why Feng Yu wants to control his supply to get the most profits out of it. But since gold prices had started to rise, it’s time to start mining. The mines Kirilenko bought has no problem supplying 300,000 Ounce a month.
But they can make more money in the future and must limit their production now. At the same time, they must bring in newer equipment and technologies to get more profits in the future.
Feng Yu called Kirilenko to discuss with him. Kirilenko agrees without hesitation. If it was not for Feng Yu, he would have started full production to sell their minerals.
Now, Feng Yu has found a big customer for them, and what’s there to hesitate? Furthermore, the terms of this contract are very attractive, and Kirilenko has no reason to reject them.
Kirilenko wakes up with a smile on his face every day, as gold prices keep rising. Everyone is losing money in the stock markets, but they are making money from the gold market.
Although Feng Yu had reminded Kirilenko, there’s no need to use high leverage, but his earnings are still very high. More importantly, he doesn’t need to worry about anything as Feng Yu will inform him if there are any changes.
Kirilenko felt he is blessed to have a good friend like Feng Yu. When people partnered to do business, they will worry the other party will get more authority and power.
But Kirilenko is different. He wishes Feng Yu will interfere with their businesses more often. Every time Feng Yu interferes with their business, he will make more money.
“Feng, what are we going to invest with the money we got from selling our gold?” Kirilenko asked.
“Can you still buy gold mines?” Feng Yu asked.
“Why not? This is not a problem. But gold prices have been rising recently, and those people might not want to sell. Even if they sell, they will demand a high price.” Kirilenko replied worryingly.
“This is not a problem. Gold prices will double within the next four years. Of course, we need to include inflation and our cost, etc. You can decide if it is worth the price. Investing in gold mines will be a profitable business.” Feng Yu explained.
“Gold prices will double within four years?! Alright. Then we should not be focusing on Russia only. We can look at other countries too. I remember there are some gold mines in the US.”
Kirilenko is feeling proud. You, Americans, have always been taking advantage of us Russians. This time I will be the one taking advantage of you all.
“Ok. If the price is reasonable, we can invest our money.”
“No need. We can get loans. If it is still not enough, we will think of other ways.” Kirilenko laughed.
Although the bank interest is high, their returns from the gold futures market are much higher. That’s why getting loans is worthwhile.
“Alright. You can make the decisions.”
……
After hanging up, Kirilenko immediately asks his men to contact those mine owners in the US. He asked his men to tell those owners that Russia’s Polar Bear Mineral Enterprise wants to acquire their mines. The price is negotiable.
The first company they contacted is Freeport. It is a US mining company with a long history and owns several gold mines.
But this company has intentions to expand their business and does not only want to do gold mining alone. They want to enter the copper, iron, and other metal mining businesses.
However, the company does not have sufficient funds, especially since the US economy is not doing well. Their share prices had also dropped, and they were forced to abolish their plans to acquire another company.
This company can issue new shares to raise funds, but their share prices are very low now. How many new shares must they issue to raise sufficient funds? Also, they must invest in some important projects like upgrading their equipment.
At this time, someone told them that Russia’s top Tycoon wants to buy their gold mines. They heard that this Russian Tycoon is very generous and can ask for a good price since he wants to buy their mines.
The mines under this Tycoon’s company are all located in Russia. Are they going to expand overseas? So, Freeport’s management sent their representatives to meet Kirilenko’s men to see if the offer is right.
If the offer is right, Freeport doesn’t mind selling a few of their gold mines. Last year, gold prices had been unpredictable, and rumors are saying it will rise this year. But who knows?
If the war in Afghanistan ends, the US will become the most attractive market for investors. They will channel their funds to the stock markets again. The gold price might fall when this happens.
Simply put, Freeport’s management felt the US will win soon. The US government had just announced Bin Laden has nowhere to hide!
Kirilenko had used his mining company as collateral to get a large loan from Russia, and negotiations with Freeport went smoothly. He quickly signed the contract to buy six mines located in Indonesia, Australia, the US, and Peru.
When everyone thought this is the end of the Polar Bear Mining Enterprise’s expansion, Barrick Gold’s representative came. They also felt gold’s profits will not be high in the coming few years. Since there are fools who want to buy their mines at high prices, they don’t mind selling them for profits now.
Also, they can use the money to buy other gold mines. Most importantly, they must get past their current crisis now.
The shareholders of Barrick Gold had lost quite a lot in the stock markets, and the mining speed of their gold mines is too slow for them to get money to compensate their losses.
Now, someone is offering high prices for their gold mines, they want to sell them immediately.
Kirilenko reached a deal with Barrick Gold to buy eight gold mines in the US, Canada, Brazil, Argentina, and Australia.
After two rounds of buying, some smaller mining companies started to contact Kirilenko. They only own one or two gold mines, but some of them own perpetual mining rights. That means they can mine until the mine is depleted.
Kirilenko continued to buy without hesitation and bought nine more gold mines.
South Africa’s Anglo Company also sold three gold mines to Polar Bear Mineral Enterprise. In the past few years, the gold prices are not high, and Anglo Company did not make much profit. Furthermore, these mining companies often have a high debt ratio.
A company with no debt, like Polar Bear Mineral Enterprise, is rare in the mining industry. But after taking the loan, Polar Bear Mineral Enterprise’s debt ratio becomes 78%. This is way higher than the warning line. But Kirilenko and Feng Yu are not worried. They can easily transfer funds to repay the debt. Also, their mines are still not operating at full capacity. If they increase their mines’ production, the debt ratio will drop quickly.
Polar Bear Mineral Enterprise now owns 32 gold mines and is the biggest gold mine company in the world!
Translator’s note:
Freeport-McMoRan
