To make money investing in mining, it is not necessary to invest in mines or mining companies. You can also invest in those who supply goods and services to the mining industry.
Consider those who invested in Gemcom (TSX:GCM) , a supplier of software to the mining industry. They have just announced that they are to be taken over by JMI Equity and The Carlyle Group. Here is how current shareholders will benefit: Under the terms of the agreement, Gemcom shareholders will receive $2.90 in cash for each share of Gemcom common stock, representing a 16% premium over Gemcom’s weighted average closing price for the last forty-five trading days.
Gemcom was started in the early 1980s by Andy Robertson, who now runs InfoMine.com and Robertson GeoConsultants. He pulled in some young computer programmers and got them writing the codes that now form the basis of the software that is used by many mines around the world. Andy is still a director of Gemcom. They struggled in those days of mining-time’s down-times, but they persisted, and the company grew and went public. Recently they took over Surpac and now themselves are taken over.
Can Geocom continue to grow and make money for investors? My guess is they can. I know many of their engineers and programmers and they truly are talented. I know many of their computer codes and they are impressive. If the mining industry continues to prosper, surely they will prosper—and even more so now that they have the money and drive of a private equity firm behind them.
They have competitors, including OISsoft, Micromine, Carlson, and others. Each has better software in a specific area, but overall, I suspect Gemcom is ahead. Although if I were investing in mining software suppliers I would look very hard at the three I mention here (and others) and spread my bets.