Hi,
You know this was not a personal battle, I have expertise in certain area's and have no problem admitting those things I am no expert in, but sometimes people have a way of making it personal.
First when Rookie who is infact a decent nice guy asked for help, it was in line with our knowledge and base of expertise, I get nothing from lending good sound advice that stands on it’s own merits.
We are not talking about building homes by feeling, we are discussing the merits of making a half million dollar loan on a property that may not be worth anywhere close to the FMV of other properties because of it’s contamination! And what is the potential liability if this borrower dumps this property on Rookie?
Rookie did not even once refer by name to “Cost effective way’s” in any of his postings reguarding this property! My advice is sound, professional and stands on it’s own merits considering the amount of money being discussed and the potential liability of the situation!
Your advice is paramount to betting on a horse at a horse race where the odds are 50/1 and placing your bet to “Win”, if I want sound advice on contamination do I ask a man on the street or do I go find an "Environmental testing and abatement company?
You and I don’t buy real estate based on someones word, we do our due diligence and check the comp’s from the MLS system, we recognize the accuracy of those MLS numbers. We do not depend on the accuracy of things like the tax assessors value, zillow or aol home values because these numbers are known to be wrong, unreliable for accurate values.
Just like we would not go to a plumber to design a home, or we would not go to a roofer to frame a home, we look for accurate professional answers when our money is on the line!
It’s nice that the owner will pay for testing, but those test’s need to be done by a professional third party who does not have special interests and has reliable expertise to insure our friend rookie can make a known decision as to the risk / reward and liabilities of this type of investment!
Let’s talk about the realities of business, I use OPM in every way possible and I am certainly not ashamed to admit it, 10 years ago I started into a business my family had experience and records in going back to the civil war, but know one had tried to successfully go back into mining since 1945.
I have not worked for another company as an employee since 1999, and never will go back! But let me tell you the realities of starting your own business.
In 1999 when I left my senior managers position in the construction industry in california I solicited three investments for about $2m dollars, we bought three placer gold operations with a little equipment and were able to cover the labor and expenses to start, gold was $265 an ounce and we were producing gold for a cash cost that first year of about $120 an ounce, so for every ounce pulled from the ground we gross profited about $140 per ounce, not bad so when we took in our raw gold and added up our refiners tickets we recovered a little over 10,000 ounces, our revenues were a little over an equivelent $2.38 million dollars (Gold is not pure in it’s raw state so although we collected 10,000 ounces the pure equivelent was about 9,000 / 999 pure ounces.
But with gold being a comodity our investors agreed to take half there investment back in raw gold that first year and we had the capital to not only restart the next year but two of our investors agreed to re-loan there capital alloowing us to buy two more mines, so the second summer we added additional pieces of equipment and increased our production to 24 hour a day operations.
The second year we started doing exploration testing to “Prove up” known reserves in the ground and start the process of meeting the federal 43-101 standard for “Proven, Probable and infered” reserves in the ground, the compliance to 43-101 was a key to the company being able to capitalize and use our reserves for colateral.
Second year we were able to pull about 15,000 ounces and we completely paid our original investors and was able to add the ability to process an additional 500 tons an hour, so going into our third year we continued to expand and we still owed a yearly royalty of 2% of the net on the mines to our original investors, but we were debt free, continued testing for reserves forward of production and now owned about a million dollars in free and clear rolling stock equipment and about a half million in processing plants.
The third year we produced about 25,000 ounces about six million in revenue and our cash cost of production was about $2.7m so we pulled about $3.3 million in equivelent cash value profit that year, we acquired another 5 mines that 3rd summer and increase production ability by over double going into the end of the third year. That 2003 year we developed our first residential project of 60 units of townhomes at an average price of $145k and an equivelent profit of about $35k a unit, we sold the development out in 8 months. The summer of 2004 we were operating 10 mines and produced 60,000 ounces, gold was going up in value and we grossed a cash equivelent of $20.2 million. We developed a couple of properties over 2004 that allowed us to sell about 160 homes that year of about $165k average price and about a $35k profit, we produced gold at a cash equivelent of about $7.8 million and we started buying our own reverse rotary drill rigs to drill our sites and help us save what we were paying on the open market for test drilling, we also bought a core drilling rig to start drilling the hard rock side of some of our properties.
We now owned about 3.5 million in equipment and processing plants outright, we started buying and selling mining equipment that year and started doing welding and fabricating for some other mines around our yards, we also bought an Anthracite coal mine in 2004 and increased production and shifts in that operation, it is still producing today. Anthracite coal is selling at about $140 a ton and we produce it for about $50 dollars a ton. We currently sell about 125,000 tons a year.
In 2005 we acquired a property in south america of about 160k acres in the Amazon Jungle, we continued to increase our mining operations and actually created companies for drilling, selling mining equipment, welding and fabricating, exploration, mine development, mine operating and equipment rental in 2005, our production hit some 75k ounces, we were doing a little over a million in revenue in each of our services companies and acquired a mine in australia and two in South Africa, and an underground mine in Canada, we built and developed about 320 homes in 2005 that sold in the mid 150k range and profited about $30k a house.
In 2006 we acquired a open pit coal mine with over 10m tons of coal, we ventured into the beginnings of providing capital for businesses in information technologies, education, construction management, security and financial services, in 2006 we continued growing our business, we built and sold about 500 units of townhouses and homes, and expanded our mining holdings by almost double our previous year.
The reality is that gold has gone up by almost 400 percent in the last 10 years, but our cost today to produce an ounce of placer is about $180 dollars cash equivelent per ounce and underground we produce gold at about $285 per ounce, coal is very much in demand and we create over half our power in the US by clean burning coal, the reality is if you delegate responsibilities, stay away from micro managing and hire professional people who know what there doing you can certainly grow a huge business over 10 years, I own all of our mining interests outright and I own controling interests and operational control of all of our other investments (Companies) and when we build or develop we borrow every buck we can get and I own the net from every development.
I am sorry to tell FD Jake you made this personal, you have a bad attitude, and you had better get used to the idea like I did 10 years ago that there will always be bigger businesses than mine, and I have no problem admitting when I am wrong or when I need to defer to someone who knows more than I do!
I have been very careful to not burn bridges and to listen before I speak but your little tyrade here has been nothing but insulting, very un-professional and slanderous!
I have worked my ass off to get where I am at, I have lost two previous personal fortunes and I have very much learned from that experience, but know one should put capital “At Risk” with out knowing and understanding the risks and liabilities and doing things on the cheap can create problems in the future, and no investment is worth losing your shirt over!
I don’t hold any personal grudges FD Jake but I would encourage you to change your professional manner!
Good luck to you.
Sincerely,
GR