In a bid to concentrate our management resources on the gold mining business, we separated the product sales business and began our business anew as Jipangu on November 1, 2010.
While continuing to focus on gold production and exploration in North America, we intend to use sound financing to expand our network and alliances throughout the world. As a unique Japanese company in the global mining industry, we are determined to pursue our goals while contributing to harmony and stability for all people.
Outlook at an international inflection point
With the world at a major inflection point, companies face the need to make dramatic decisions. With the belief that history repeats, Jipangu views the times from a macro perspective and considers a turning point in history as an anomalous phenomenon. If we can identify similar phenomena from past events and compare them with the situation today, we believe that we are very equipped to forecast the future.
Considering 60 years as a cycle, we identify the phase of the cycle we are in today in an effort to forecast major trends going forward. Based on this approach, we believe that the next 15 years will see a rise in gold prices. Therefore, when the phase of rising gold prices comes to an end, we may enter other mining sectors, such as the base metal business. In other words, our investment strategy is anything but a short-sighted forecast that is just jumping at near-term gold prices. Rather, our business model always looks for the inevitable outcomes of history.
Investment at below fair value
The investment method of Warren Buffett, one of the world’s wealthiest persons, is to find blue-chip corporations, invest in them at below fair value, and continue to hold them as their value increases. Using this method, he has built a fortune of 4.5 trillion yen.
Anticipating that gold will experience a prolonged rising trend, Jipangu believes current prices of gold mines to be undervalued. However, it does not mean that we can get good returns by simply investing in gold mines or gold mining companies one after the other. Global share prices of gold mining companies differ significantly; some are overvalued while others are undervalued. In the past Jipangu took equity stakes in gold mining companies such as Cambior, Aflease, and High River. We invested in these three mining companies because when their corporate values are taken into consideration, we found that their share prices were much lower than the value of their gold resources. Timely investments like these create latent assets. And latent assets make it easier for companies to raise funds at the next stage.
Jipangu has demonstrated a business model in which we expand assets through investment and acquire gold mines or gold mining companies with those assets based on a corporate approach of investing below fair value. Our way of thinking is to regard gold mining companies with huge mineral resources as undervalued because we believe that resources count the most when gold prices rise.
Friendly Equity Participation
Mergers and acquisitions (M&A) can be broadly divided into two styles: friendly and hostile. Jipangu has never engaged in hostile M&A. Equally, even if it’s a friendly takeover, we are not interested in equity participation where we cannot take part in management. Our objective in M&A is to participate in the management of a company through capital participation and make the best use of the personnel of the company.
Jipangu’s approach to capital participation, which is quite different from the US style, has attracted a great deal of attention and favorable impressions from the world’s gold mining industry. In addition, this policy allows us to earn the trust of mining companies and to access the knowledge and know-how of mining executives, despite our short corporate history since our founding in 1995. It is our intention to place “being friendly” and “management participation” as one of the pillars of our corporate philosophy.