Arafura Pearl Project 2010

[jshepherd]

This announcement is sort of intriguing. Arafura Pearls is offering investors the opportunity to become growers. I think I am reading this right but I'm not sure if I have all the information. Investors are invited to invest in the very beginnings of pearl production, to receive payment (in pearls?) when they harvest in 4-7 years.

The investment is $6,950 (probably Australian) for each 100 shells, which can potentially be seeded twice.

http://www.arafurapearls.com.au/Console/files/arafura 2010 mis flyer.pdf

 

[Ramona]

That seems like a bad deal to me and smells of money problems?

 

[Ramona]

I don't know whether there is anything to it:

http://www.pearl-professor.com/2009/03/is-arafura-future-enron-of-pearls.html

 

[Caitlin]

Don't forget the latest from the Pearl Professor: LINK

I wonder what any investment money really would go toward paying? Like overhead?

Yeah, I would buy a hundred seeded Sea of Cortez shells and 4 years later, get the pearls from my shells. But I can't see how that would help the growers unless they needed cash right now. Therefore, that is how I read all that fancy language over at the Prof's place.

That makes working with a small pearl farm such as in Indonesia, a far more appealing risk than feeding Arafura's delusions of grandiosity!

 

[Ramona]

Still the $6,950 seem high. It may depend whether they mean 100 successfully seeded shells or just shells. What is the success rate and the % of rounds one can expect from 1st and 2nd grafts?

Otherwise I would love the concept.

 

[jshepherd]

Sorry for the last post, Ramona. I must have accidentally clicked "edit" instead of reply and quote. I didn't mean to overwrite your post.

This was what I meant to reply

I agree that report is worrisome, but I think the concept in their release is intriguing. It would be interesting if other pearl farms did something like this. Think of Pearl Farms in French Polynesia, for example. They are going under for lack of capital. But if investors came in now and sponsored a certain amount of seeded or seedable shell, they could get in cheap and reap the benefits a few years down the road when prices have more than doubled what they are today.

 

[Caitlin]

when prices have more than doubled what they are today.

You think the prices will more than double in how many years?

Anyone who does invest in an operation should use a sustainable model like Josh's for growing the pearls. No big machines, no blowing growths off the shells, but let the fishes nibble at them, etc. In terms like that, it seems like a great way to invest, but not in a Company with a whole crew to do the fancy bookkeeping.

 

[Ramona]

I have also been thinking that there will be a shortage of pearls in the market a few years from now due to farmers giving up. However, one big question is whether we are going to have another stock market crash next year and how long it would take to work ourselves out of that. So, maybe waiting a couple of years for pearls might work, but what if the company goes under? Maybe Josh could give a better idea of how much "fat" pearl farms have to get them through difficult times.

 

[SteveM]

If Madoff weren't such a recent memory I'd be tempted to think that Mr. Ponzi was back in town.

Like Jeremy and Caitlin, agree that independent small farms would be more worthwhile supporting. More environmentally sensitive, and more employment per unit of pearls harvested.

And no pearl glut.

 

[judimcc6]

You need to buy 2 shares of $6950. at the minimum. Jeremy, are you thinking of investing? Do you know of anyone else who has received this literature?

 

[jshepherd]

No, I wasn't really considering investing. I just thought it was intriguing. I don't know what MIS is, but I think it is something particular to Australia. I believe they are looking for Australian investors.

Someone sent me the link to the PDF. I didn't receive it directly.

 

[pearlescence]

Looks so high risk as to be practically in space.

 

[Ramona]

I think it is tax deductible for Australian investors. What is strange is that they don't give any idea about the number of pearls and the quality to be expected. So, there are no guarantees it appears.

 

[judimcc6]

I would imagine that they would be targeting Australian investors, because, one would need to see some hard evidence of a farming facility. But, Ramona, I can't imagine that any pearling farm would give any guarantees. It would be so impossible to monitor any farming. It does sound intriguing though. Pearl dreams...

 

[Ramona]

Yes it does. Co-owner of some busily working oysters sounds like fun. But what I meant was that a pearl farm must have some idea about the % of seeded oysters producing pearls and the ratio of baroques vs rounds. I can buy a nice SS baroque for $30 without risk now. So, it is not evident to me why I would want to invest that much money not knowing what to expect. They obviously should have a reason for the price they are asking.

 

[Amrita]

You need to buy 2 shares of $6950. at the minimum.

And I think that would be in AUD. So in terms of USD, it would be around 6275 X 2..

... I don't know what MIS is, but I think it is something particular to Australia. I believe they are looking for Australian investors.

They probably are looking for Australian investors. MIS...I am not sure what it means here..., but it does mean Management Information Systems in the commonest usage in business.

 

[Pearling Technologies]

Coming in a little late but.....MIS = managed investment scheme. The investor pays upfront and can receive up to 143% tax deduction in the first year. The company then gets the funds to use for husbandry and ultimately the investor gets the return at year 4-5 and 6-7 (less other costs). The MIS was introduced very early on and runs side by side with the normal farm operations.

 

[Valeria101]

The tax deal sounds better then the pearling pretext, is it not?