Taking Stock 24 September 2026

It was in the High Court about 20 years ago that I received a judge’s support in confirming the difference between incompetence and lying.

For that reason I can confidently report that the Stuff newspaper in Wellington displays inaccuracy, errors and incompetence but I do not, and cannot, allege that it tells lies.

My certainty about this followed a limp-wristed legal attack on me in or around 2006 by what was then the worst commission-selling chain of financial products that I have encountered.

A company called Money Managers had sold franchises to people generally without any useful financial market knowledge. Over a decade or more some 20 branches had been formed, usually run by what capital markets called muppets, given their guidance on what products to sell by the muppeteer, Douglas Lloyd Somers Edgar, an entrepreneur from Southland. 

By early in the 2000s his group was selling its own branded products under his "supervision," the largest of which was known as First Step, which had four slightly different funds. The "riskier" paid more than the self-named first mortgage contributory fund.

For a decade or more Edgar and his staff ran 60 minute Sunday morning selling shows on Radio Pacific, paying $5000 for their hour. The radio station, like newspapers and television at that time, had no sense of responsibility for the detritus presented to audiences.

They accepted the advertising revenue and made no effort to prevent the awful rubbish being dished out to trusting audiences (They should have been prosecuted).

So I acted. I very loudly told journalists, the public, and clients that Money Managers was mis-selling First Step, when the staff compared its proposed returns with bank deposit rates, and even more stroppily denounced their advertising that compared their property syndicate returns with Government Stock rates, a selling line based on a syndicate having a government department amongst the tenants of a syndicate property.

I described the marketing as misleading and wrong.

Under pressure from its muppets, who were receiving worried calls from angry clients, Money Managers' muppeteer, Edgar, instructed a lawyer to sue me.

The lawyer, happy to accept a fee for what he must have known was a hopeless case, filed papers and I ended up being asked to attend a conference in a judge's chambers. The judge, one of New Zealand's finest, wanted to resolve the issue so that court time was not further wasted.

The key moment came when she heard Money Managers lawyer declare that the word "wrong" implied "dishonesty" and then allege by extension that I had no right to call MM "liars".

The judge, very politely, asked me what I meant when I used the word "wrong".

I explained to the judge that I considered using the word "liar”, but I could do that only if I knew MM itself knew that what it was claiming was a lie. I had no such knowledge. It was conceivable that MM was so stupid that it did not realise its claims were false.

I used the word "wrong" meaning MM was "incompetent, inaccurate and incorrect", I told the Judge.

The judge turned to Edgar and his lawyer and sweetly said that they surely would be happy with that - I was not calling them liars, just incompetent, inaccurate and incorrect.

As you might expect, MM indeed were delighted with simply being called incompetent, inaccurate and incorrect.

The Judge resolved that the matter was settled and we should all go home. The MM lawyer no doubt was paid for his trip to Wellington.

All of this explains why I now lament the Stuff newspaper's dreadfully inaccurate and ignorant ongoing campaign against the gold mining project at Bendigo.

Virtually every week one of its reporters, Mike White, a resident of Luggate (near Bendigo), writes utter nonsense about the proposed mine, repeatedly making claims that are demonstrably incorrect, as he should, but perhaps does not, understand.

I assume he is unfamiliar with mining, uninquisitive, influenced by activists, and not supported by sub editors who should fact check his "stuff".

Specifically, he describes the tailings storage facility as a "dam" and warns of a "dam" that might threaten the safety of the Clutha River, some seven kilometres away.

A dam, by Wikipedia definition, is a structure built across a river or stream to hold back or store water.

He then goes on to state week after week that the stored material is toxic and extends his faux argument to claim that the "dam" may burst and infiltrate the Clutha River during its "10,000" year life.

He must believe this. Otherwise he would be knowingly repeating sheer nonsense.

The tailings storage facility can live for 10,000 years only if Santana continue to mine gold for 10,000 years. Once it stops mining, the few feet of water evaporates within months.

If Santana mines 120,000 ounces a year - roughly four tonnes, 10,000 years of mining would require Santana's discovery to extend to 40,000 tonnes, or roughly 20% of the world's discovered gold. That would at the current grade of gold require a gold-mining area of around 20,000 hectares.

The area Santana is licensed to mine is around 350 hectares.

The concept rather stretches any common sense, so should never have been published, let alone advocated. The tailings storage facility becomes pasture land within a year of the last mining.

Here are the facts available to anyone with any knowledge of mining:

The mining process digs up the gold-bearing ore and enters the ore, hopefully comprising trapped gold, into a processing plant where chemicals, largely cyanide, leach the gold out of the crushed rock.

The process involves water and cyanide, leaving a toxic slurry to exit the plant. The slurry is captured by pipes in full, the watery substance recycled, chemically treated, and the poisonous cyanide detoxified chemically. Cyanide is no longer in the slurry.

The slurry and water is then piped to a tailings storage facility built to house the crushed rock, and sitting atop of the rock will be a few feet of water that is no longer poisonous (though neither will it be as sweet as mountain water). The rock comprises 95% of the storage facility.

To prevent the crushed rock and water from escaping, a huge triangular structure is built from rock, concrete and steel, of such immense strength that it will be engineered to sustain the violent movement of a 1 in 10,000 year earthquake. This structure is not a chicken-wire fence. It is an engineered high quality structure.

Once slurry and water stops being pumped into the storage facility, the few feet of water evaporates, leaving the crushed rock. Soil is then used to cover this "hill", grass seed added, and what was a storage facility becomes a paddock, absolutely suited to grazing ruminants, no more "toxic" than any other hill in the area.

My definition of a competent, accurate and correct newspaper reporter is one who has no bias, researches the facts, and presents them in an informative, balanced way.

If the reporter is a communist, or an activist, or a greenie, I, the reader, would never know. The opinion of a reporter is roughly as relevant to newspaper reporting as the volume of a vulgar belch in church. A reporter deals in facts and the opinions of experts, not in his back lawn bias.

Stuff has allowed White to crusade by repeatedly revealing ignorance. This should stop. It undermines Stuff's credibility and will affect its circulation, as similar crusading has done at the quite dreadful Otago Daily Times.

The late Sam Neill was equally as incorrect, inaccurate, incompetent and wrong when he compared the barren land on top of the Bendigo ore with a native forest, filled with bellbirds, kiwi, and green ferns.

Utter tripe. The land comprises rotten rock, lifeless soil, rabbits, a little gorse, patches of heather, and a lone sad kowhai tree which happens to sit above the richest vein of gold.

I record all of this with some conviction, having spent nearly 50 years visiting mines, investing in mining, lending to miners and, in particular, tramping around the hills at Bendigo, often with groups of investors. (I was a foundation investor in Matakanui, sold to Santana, and remain a minority shareholder).

I am privileged to know well several of New Zealand's most successful miners, none of whom have built the sort of dangerous structure that periodically collapses in places like Africa or Asia, where mud, rather than concrete, is often used.

Whatever the decision of the Fast Track Panel on the consent application to mine Bendigo-Ophir, it surely will not be influenced by campaigning journalists, least of all those who by my definition are inaccurate, incorrect and incompetent.

I shall refrain from moving on to the inaccurate & grossly incompetent university professors who inaccurately and incompetently continue to allege that the financial benefits of the project largely go to Australia.

While the 68% of surplus going to N.Z. is a greater share than the 32% going to Australian investors, I will simply invite those professional bigots to attend a course in remedial arithmetic.

Seminars

In our now completed round of seminars for our clients where James, Edward and I, discussed the changing world for investors.

James spoke about the ending of the age when sharemarket index funds offered the sort of proportional diversity that was intended when share index funds were invented.

American market leaders now publicly forecast that the around 45% of America's largest 3000 listed companies will lose most of their value in the coming decades.

A very small number will succeed so spectacularly that the index, covering winners and losers, will have to cover the failures of most in the index.

Edward described the sectors that might contain winners.

I tracked the crises of the last forty years, describing the repeating signals of impending problems, generally linked to gross market over-confidence built in the changing standards of honesty and competence.

The changing signals identified variable governance standards, the rise and fall of accounting, trust company, audit and director behaviour, and investors' changing attitudes to risk/return equations.

As well, the integrity of company executives always varies, and the periodic media glorification of high-risk entrepreneurs becomes a signal.

Who recalls the television features deifying "rich" listers, with programmes highlighting leased aircraft for executives (Cory White & Salmon, Jones, Bridgecorp, Gerald Henry's companies etc)?

Crashes follow extreme over-confidence, bad laws, useless regulators (NZ Securities Commission 2004–2008), NZ Stock Exchange (1984–87) and greedy lenders (banks 1984–87, finance companies 2001–2008, private credit now).

The seminars concluded with a discussion on Santana, a footnote presentation for those who stayed on because of an interest in this project.

Perhaps 20,000 New Zealand investors have an interest in the project, now at a stage where Santana must address the issues that the Fast Track panel regards as critical to its decision.

I have virtually no doubt that the discovered bodies of ore will one day be mined, providing the margin between the gold value and production costs remains around the current luxurious level.

How it will be mined, and with what concessions to real and imaginary risks, will have its first test when the panel declares its draft verdict in November, and its final verdict on or before January 20.

At one seminar the question was asked how a sharebroker could advise clients if the broker had a vested interest in the project. (My family and our staff hold shares in Santana.)

Any experienced broker would develop a deep knowledge of the project, form an opinion, possibly invest himself in the project, and would provide advice to clients carefully acknowledging unresolved risk, and describing returns if risks were mitigated, and achieved the expectations of the financial modelling.

He would not be doing his job if he did not follow this path.

The implied question of conflict of interest is addressed by full, regular disclosure, and hopefully fairly well-established reputation with clients for information gathering, careful judgement and integrity.

Of course, none of this applies to shares bought by an index fund.

Last week admitted to a new mining index, Santana cannot access the names of those who invest via an index fund, but it writes regularly and carefully to its visible shareholders and to the market operator.

Surely the purpose of a seminar is to address identifiable investors who are interested in the project.

Thank you to those who attended the seminar.

Presentation notes will be available to clients who could not attend.

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Bond issues

Contact Energy is expected to issue a new subordinated capital bond in October. We expect the bond to have a term of around 6 years, with an interest rate of at least 6.00% per annum.

Investors who are interested in this potential bond are welcome to contact us with their CSN and an indication of the amount they may wish to invest.

We will then contact them once the final terms and further details are available.

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Travel

Our advisors have an extensive travel schedule coming up over the next quarter, including the following dates:

25 September – Palmerston North – David Colman

5 October – Napier (Havelock North) – Edward Lee

5 October – Nelson – Chris Lee

6 October – Napier (Mission Estate) – Edward Lee

6 October – Blenheim – Chris Lee

9 October – Wellington – Gavin Parkes

21 October – Auckland (Albany) – Edward Lee

22 October – Auckland (Ellerslie) – Edward Lee

29 October – Christchurch – Johnny Lee

We will also visit Christchurch, Wellington and Lower Hutt in November. Dates to be confirmed.

Please contact us if you would like us to visit your area or would like an appointment.

Chris Lee

Chris Lee & Partners