Ponto strikes again...LOLTake heart! The market is still in...

Ponto strikes again...LOL

Take heart! The market is still in great shape. Break out a bottle of Bolly and buy more penny dreadfuls.

We must still be in a roaring boom because Range Resources has doubled in price in the past month from 2.2¢ to 5¢. This should give all of us enormous optimism, because if Range is looking beautiful to the punters, then almost any dog stock should be able to get a run.

Range shares jumped at the start of October on news that it had acquired a 50.1 per cent right to all the minerals and hydrocarbons in Puntland.

When Pierpont first saw that announcement it took him fully five minutes to stop laughing. After all, can there be a more appropriate location for a speculative explorer than Puntland?

In fact, this was not a jest because Puntland is a province of Somalia, which Range said is "one of the last underexplored countries in the world that has high potential for vast reserves of hydrocarbons".

Maybe it has, but Somalia also tops the world tables in terms of sovereign risk. Heaven knows, Pierpont has invested in mining companies in some pretty dodgy spots around the world, but Somalia is something special, as any reader who saw Black Hawk Down will realise.

A little history. The dictatorial regime of Mohamed Siad Barre was ousted in January 1991. Turmoil, factional fighting and anarchy have followed in the years since.

In May of 1991, northern clans declared an independent Republic of Somaliland that now includes the administrative regions with the unlikely names of Awdal, Woqooyi Galbeed, Togdheer, Sanaag, and Sool.

Although not recognised by any government, Somaliland has maintained a stable existence, aided by the overwhelming dominance of a ruling clan and economic infrastructure left behind by British, Russian, and American military assistance programs.

The regions of Bari, Nugaal and northern Mudug comprise a neighbouring self-declared autonomous state of Puntland, which has been self-governing since 1998, but does not aim at independence.

Puntland has also made strides towards reconstructing a legitimate, representative government, but has suffered some civil strife.

Puntland disputes its border with Somaliland as it also claims portions of eastern Sool and Sanaag. The Puntland and Somaliland governments seek support from neighbouring states in their secessionist aspirations and in conflicts with each other.

The Range statement to the Australian Stock Exchange on October 5 contained a map of Puntland, showing Sool and Sanaag as part of the territory it would explore. In fact, those parts of Puntland are in dispute, which means the ownership of any resources discovered there is also likely to be in dispute.

Call Pierpont old-fashioned, but if he were running a mining company, he would prefer to negotiate with a dictatorship rather than deal with anarchy. With a dictatorship, he would at least know who's in charge today. With anarchy, you don't even know that - and Somalia must be the most anarchic country on the planet.

Beginning in 1993, a two-year United Nations humanitarian effort (primarily in the south) was able to alleviate famine conditions, but when the UN withdrew in 1995, having suffered significant casualties, order still had not been restored.

The mandate of the transitional national government (TNG), created in August 2000 in Djibouti, expired in August 2003.

The new Somali President, Abdullahi Yusuf Ahmed, has formed a transitional federal government (TFG) consisting of a 275-member parliament. It was established in October 2004 to replace the TNG but has not yet moved to Mogadishu.

If it comes to that, the government may never move there because the location of the capital city is one of the hottest political issues in Somalia. Numerous warlords and factions are fighting for control of Mogadishu as well as for other southern regions. Also, Somalia is widely suspected of links with global terrorism.

If Range finds anything of value in Puntland, there would be sovereign risk, especially with warring tribes. The area is asset rich in terms of minerals and natural resources but is inhospitable in terms of weather (hot desert and subject to long monsoon seasons) and major infectious diseases such as hepatitis A and E, typhoid, malaria and dengue fever, not to mention rabies. The average life expectancy for locals is 48 years.

The central judicial system has broken down. Law is now administered by feuding clans, according to their views of justice, and Islamic sharia law prevails in some parts.

Numerous factions and clans maintain independent militias and the Somaliland and Puntland regional governments maintain their own security and police forces.

Somalia's small industrial sector, based on the processing of agricultural products, has largely been looted and sold as scrap metal. The public telecommunications system was almost completely destroyed or dismantled by the civil-war factions. Private wireless companies offer service in most major cities, although Pierpont cannot imagine how they collect the phone bills.

The official currency is the Somali shilling, which is quite valueless. Businesses have resorted to printing their own money (which has the side benefit that there is no way of measuring the inflation rate).

Since Range made its great announcement, Somalia has become even more unstable.

Early this month, the cruise ship Seabourn Spirit was attacked by pirates while it was cruising down the Somali coast. The pirates fired machine-guns and rocket-propelled grenades at the liner.

Which raises a small point. If Somalis are prepared to attack a 100,000-tonne cruise ship out at sea, Pierpont cannot imagine what they might do to a drilling crew on the mainland. Especially if it found something valuable.

The TFG is the 14th attempt since 1991 to reinstate central government in Somalia, which leaves Pierpont wondering who's counting.

A few days after the pirate attack on the Seabourn Spirit, terrorists tried to assassinate the Prime Minister.

The Prime Minister, a chap named Mohamed Ali Gedi, had flown into Somalia to try to hold talks with a dissident faction of ministers based in Mogadishu to end a rift in the government that has stirred fears of renewed civil war.

After arriving, Mohamed and his retinue drove off in a motorcade and were promptly ambushed.

Mohamed survived, but six of his bodyguards were killed. Mohamed wants to make the northern city of Jowhar the capital of Somalia on the grounds that Mogadishu is too dangerous: a point his would-be assassins have amply confirmed. Indeed, Mogadishu must rank as the world's most dangerous capital city, ahead of Baghdad and Port Moresby. Meanwhile, government ministers from both main factions have been reported to be buying large quantities of weapons in recent months, leading observers to speculate that a civil war is looming.

This is truly a top place to go mining. Pierpont prefers to do his exploring in countries where he has at least a rough chance of getting in and out alive.

But to return to Pierpont's original point, if the punters are prepared to enthuse over oil drilling in Somalia, there must still be plenty of heat left in this market.

Pierpont's attention has been alerted to advertisements on the internet in which a company called Blue Sky Mining LLC is guaranteeing to double your profits in six months by attending a 2 day "Business Master" course.


The course was held in Canada early this month, so Pierpont doubts any of his faithful readers would have attended. But if another course is held, Pierpont should point out, as the proprietor of that fine old Australian company Blue Sky Mines No Liability, that anyone who attends will not be getting defrauded by Pierpont but by an imposter.

Pierpont has no association whatsoever with Blue Sky Mining LLC. It's the creation of a Gabe Pennycott (depending on how he spells his name these days), who left Melbourne in a hurry last December after allegedly defrauding the locals of some $20million.

The moral is to beware of plagiarists. If you want to be swindled by a company called Blue Sky, then stick to the original!