Chris Lee & Partners Ltd

Taking Stock 26 February 2026

James Lee writes:

'Where are all the adults?'

I was sitting with a fund manager late last year as another Software as a Service (SaaS) stock rolled over. It had already fallen hard from its highs and was down again before lunch. He looked at the screen, shook his head and asked the question.

He wasn't talking just about retail investors. Many are new to the market post Covid. He was talking about professionals.

The average hedge fund managers are in their mid-40s. Most institutional portfolio managers are not far off that. These are experienced people, but many weren't managing money in the dot com bubble. They were still in high school. When sentiment shifts, markets can still behave like a kindergarten.

Experience does not remove cycles, but it does give you context if you choose to use it.

At the end of last year we said risk would be high in 2026, particularly in growth assets where valuations were full and expectations generous. That wasn't a heroic forecast. It was simply acknowledging that when markets are priced for perfection, it doesn't take much to disturb them.

A lot can change in a year: facts change, capital tightens, narratives wobble. This time AI has shifted from being a tailwind to being perceived as a threat. So it's not a shock that, when that happens, the most expensive parts of the market tend to re-price first.

That repricing is what the market is calling SaaSpocalypse.

SaaSpocalypse is not the end of software. It is the accumulation of pressure on software valuations when growth expectations normalise, and the cost of capital is no longer low. The S&P Software index has fallen sharply year to date (circa 20%). Large global names like Salesforce, Workday and Shopify have all sold off materially in 2026. Xero, one of my favourite companies and a home grown success, has not been immune and is down 33% this year.

Why is the market hitting these stocks?

First, valuation compression. For years software traded on revenue multiples and total addressable market narratives. When interest rates were near zero, a dollar earned in 2032 was almost as valuable as a dollar earned today. That is no longer true. When discount rates rise, long-dated cashflows are worth less. Software companies, by their nature, are long-duration assets. When multiples halve, it does not mean the business has broken. It means the cost of capital has changed.

Second, growth normalisation. Through Covid, digitisation accelerated and capital was abundant. Many SaaS businesses experienced extraordinary growth. Now growth has slowed from exceptional to merely good. Markets do not reward 'good' when they have priced in 'exceptional'. The reset is mechanical.

Third and the most important has been the change of the AI narrative. The market is asking whether the new tools that have been released by Anthropic AI (which allows autonomous development) lowers the barrier to entry in software. If AI can write code, does software become commoditised? If generative tools automate workflows, do Small and Medium-sized Enterprises (SMEs) need as many subscriptions? If new entrants can build products faster and cheaper, does competition intensify?

These are rational questions.

But we need to separate the ability to build software from the ability to build a business.

Xero's journey is a founder-built story. Rod Drury founded Xero in 2006 with the vision of taking accounting out of the desktop and into the cloud, long before cloud software was mainstream in small business.

He listed the company in 2007 when it had fewer than 100 customers, raising modest capital to fund what at the time looked like an audacious global ambition. Over the following decade, Xero scaled from a start-up into a global SaaS platform serving 4.6 million subscribers. Drury stepped down as CEO in 2018, but the core strategy remained consistent: build the SME financial operating system, integrate deeply with banks and accountants, expand internationally, and compound subscription revenue.

Today Xero is a serious business with over $2 billion in revenue, meaningful EBITDA, expanding margins and strong recurring revenue. It is not a concept stock. The network effect of Xero, the deep integrations and the cult following are deep moats.  As someone once told me, the last thing a SME turns off is Xero.

And yet since January 1 this year, Xero's share price has fallen materially (-33%), more than some of its more traditional stocks. Infratil (-4%), Fisher & Paykel Healthcare (+3%) and Spark (-3%) have all seen volatility, but the de-rating in XRO has been sharper. That divergence tells you how the market is pricing risk.

High-growth SaaS has been punished more aggressively than infrastructure, telecom or medical devices.

But let's be clear. These are wildly different businesses, so why did I choose to compare these four?

Well, Infratil and Spark earn over $3 billion in revenue and $1 billion in EBITDA, FPH and XRO have over $2 billion in revenue and both are likely to have more than $1 billion of EBITDA by the end of the decade.

If all four companies are forecast to earn between $1 billion and $1.1 billion of EBITDA in FY2028 using market screener as consensus, why do we value the same $1 billion so differently?

As an investor you get to compare today's valuation of that $1 billion in earnings, against a combination of margin profile and growth, to decide what valuation and risk profile makes sense to you.

I like the rule of 40 rule for companies. This is a simple rule where you combine growth and EBITDA margins. Where companies exceed a score of 40 that is an interesting starting point for comparison.  It applies best in software as cost to acquire a customer is a choice vs keeping the margin, so the market values growth and margin as equal. While best suited to software, I think it is a useful framework for all companies. Overlay the capital / investment required to achieve that growth and put that into the thought process of return on that capital investment.

The $1 billion dollar club

Spark is a telecom operator with infrastructure assets and stable but modest growth. Its risk is structural competition, including technologies like Starlink that threaten parts of the traditional network model.

Last year Spark had negative growth of 3% and over 30% EBITDA margins. It has a $7 billion Enterprise value (market cap plus debt) and is expected to earn $1.1 billion in 2028.

Fisher & Paykel Healthcare is a global med-tech leader with strong margins and durable demand, but it faces its own risks, including competitive pressures in respiratory care and broader pharmaceutical shifts such as GLP-1 drugs potentially altering long-term health trends.

FPH continues to grow more than 10% per annum, with north of 30% EBITDA margins.

EV (Enterprise Value) is circa $21 billion and FPH is expected to cross $1 billion EBITDA in FY 2028 or 21x FY 28 EBITDA.

Infratil is a capital allocator across infrastructure and digital assets. Its returns depend on disciplined capital deployment and the ability to scale data centres and other assets efficiently.

Growth requires capital, low organic growth and slightly below 30% EBITDAF. EV is circa $18 billion, over $1.1 billion in FY2028 of EBITDA.

Xero, by contrast, is capital light. Its costs are predominantly people and technology. AI is as likely to lower Xero's development cost and enhance productivity as it is to create competition. If AI tools reduce coding time, improve automation and enhance analytics, that benefits an embedded platform with scale. The friction for a small business to rip out its accounting system, payroll, tax compliance and bank integrations remains uncomfortably high. Distribution, trust and ecosystem still matter.

Xero is growing at 20% per annum with margins that range from 20% to 30%, depending on how you classify some growth costs, with an EV around $14 billion, EBITDA expected to be $1.1 billion in 2028.

Every company has risk, but looking at this objectively on the same $1 billion of EBITDA:

1) Spark's risk is structural disruption in connectivity.  Starlink-based internet and phones may one day significantly reduce broadband and cellular usage. Spark trades on 7x EV/EBITDA, has high cash flow but is going backwards.

2) Fisher & Paykel's risk is product and regulatory cycles. Trades on 21x FY28 and faces the possibility that new drugs reduce the demand for their product.

3) Infratil's risk is capital allocation and asset pricing as it requires capital investment and trades on ~18x FY28.

4) Xero's risk is sustaining growth and defending its moat in a faster software world, but needs to continue to grow, yet XRO is just under ~14x FY28.

To me XRO is now at an interesting intersection where the multiples are no longer silly, the growth and margin profile is impressive. It has low capital intensity and is likely to continue to grow.

If you believe SaaSpocalypse is not destruction but rather compression, then XRO is worth opening the file again. At less than 14x FY28 EBITDA it now prices lower than an infrastructure or health care company. That is a notable change.

The market has recalibrated long-duration growth. It has inserted uncertainty around AI. It has reduced the tolerance for perfection. That does not mean the model is broken. It means expectations have been reset.

When markets move like this, the correct discipline is comparison. Compare growth. Compare margins. Compare capital intensity. Compare structural drivers.

Volatility is not new. It is the mechanism by which markets move from narrative to numbers.

We said risk would be high this year. It is. Lots can change. That is always true.

But when the playground gets noisy, the adults are the ones quietly comparing businesses rather than stories.

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Contact Energy Retail Share Offer

Contact Energy is currently raising $75 million from retail shareholders at a price of $8.75 per share, through a retail offer. Existing, New Zealand-based shareholders can apply for up to $100,000 worth of new shares. The pro-rata allocation is approximately 6%.

Existing shareholders have until the close of the business on 6 March to apply. Applications are made online, through the website: www.contactshareoffer.co.nz. Payment is made via Direct Debit. Applicants will require their Validation Number to complete the online form with this number sent to shareholders by the share registry last week.

Genesis Energy Rights Share Offer

Genesis Energy has also announced its intention to raise money, with a $300 million rights issue opening next week on 4 March. This offer has been priced at $2.05.

The Crown has already confirmed it will participate in the raise.

 Shareholders on the register as at the close of business 26 February will be entitled to buy 1 new share for every 7.9 held. The offer opens on 4 March and closes on 17 March. Applications must be made online through the website: www.shareoffer.co.nz/genesis and only require a CSN and bank account details.

Property For Industry Bond Offer

PFI has announced an offer of 6.5-year senior secured fixed rate bonds.

More details are expected next week.

At this stage, given current market conditions, we are expecting it to offer a coupon of around 5.00%. 

If you would like to register your interest in this offer, pending further information, please contact us with the amount you wish to invest and the CSN you wish to use.

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Travel

2 March - Auckland (Ellerslie) - Fraser Hunter

2 March - Christchurch - Chris Lee (FULL)

3 March (am) - Christchurch - Chris Lee (FULL)

3 March (pm) - Ashburton - Chris Lee (FULL)

4 March - Timaru - Chris Lee (FULL)

6 March - Wanaka - Chris Lee

9 March - Whanganui - David Colman

10 March - New Plymouth - David Colman

11 March - Palmerston North - David Colman

Chris Lee & Partners Limited

Taking Stock 19 February 2026

WHEN the technology company ERoad (ERD) lost the second of its joint chief executives last week, the company's shares fell in price to a depressing 90 cents.

The joint CEO, running the American arm, had resigned last year, leaving the bright, pleasant NZ CEO, Mark Heine, in sole charge.

Heine, a lawyer specialising in patent law, had never sought the job but was landed with it when the company's founder Steven Newman surprisingly walked away, several years ago.

Heine, a polite and quite young family man, took on the role and developed the team of technology specialists, people he describes as the nicest and smartest group a CEO could ever seek.

I have met with him occasionally and admired his focus on his work, the sign of a useful CEO, rather than on polishing ego and grandstanding.

I had invested in ERoad from the beginning and believed its clever technology would help it to extend its NZ dominance (80% or more of the NZ truck market) by penetrating the US market, where just a 2% market share would exceed in truck numbers the share of its NZ market.

If ERoad had captured 5% of the US truck market, the very profitable business it had in NZ would have leapt, converting the value of its shares to a high number. It has never reached 5%.

ERoad kept developing new products — many of them enhancing driver safety and thus road safety — and it merged, to introduce new products enhanced by technology, including software that protected frozen goods that its trucks might have been carrying.

Ultimately ERoad has failed (so far) to develop a convincing level of revenue and margin in the US. Thanks to its NZ dominance, it has lifted itself to positive nett cash flow and modest profitability, but clearly if it retains its aspirations it needs a level of drive, of service development, and of leadership that has yet to appear.

Heine retires, as a decent man who progressed the company but not to the level of the promise it showed several years ago.

I record all of this not just to present Heine’s era in a fair way, but more to introduce the thought of how hard it is to forecast the progress of technology companies.

I have every reason to be grateful to Xero, another NZ technology company, but my success rate in eliminating the occasional poor performer, and my success rate of catching the stars, is patchy.

Accordingly, I revert to the mediocrity of technology index funds, which at least pick up the stars as well as the duds.

However, as at today I have not a razoo invested in a recent NZ technology story that I have long doubted but now salute. I tip my hat to the endurance, and now emerging successes, achieved by Sharesies, a company conceived by young financial market technology buffs, a decade or so ago.

Its opening stanza was to address youngsters with small coins wanting to achieve higher returns on their coins by investing in equities, directly or indirectly. Sharesies developed technology enabling people to invest in shares, at $5 per investment.

The founding technology youngsters succeeded when pitching their story to attract capital, and bumbled through a scratchy beginning, continuing to attract capital as a company whose database, rather than nett margins, appealed to angel investors, who fed Sharesies capital.

It attracted hundreds of thousands of youngsters, often investing tens of dollars each week, gave them cheap access to financial products, and sucked up the cost of walking those youngsters through the anti-money-laundering compliance pathway.

Traditional firms, like ours, calculated the cost to achieve bullet-proof AML compliance was expensive, making it impossible to offer services to people with just coins to invest.

Sharesies developed software that seems to have made the compliance process seamless, extremely rapid, and virtually costless. The fine for incomplete due diligence is hefty. Sharesies seems to have a solution.

It advises it now has close to a million clients whose average wealth, Sharesies advises, is around $4000.

This average figure will have been boosted by the clients who have significant wealth and execute their investments through Sharesies because of the low brokerage fee.

The big companies calculate that the cost of achieving AML clearance is at least $100 per person, so a company with a million legal clients has a hugely-valuable asset.

Those who cut corners, as its rival Tiger once did, risk falling foul of the regulators.

Sharesies has done much more than find a way of clearing compliance rules through clever technology.

The youngsters who founded the company have introduced a range of new products, often offering the services of other financial service providers, clipping the ticket, and accessing products that would normally be available only to those with wealth.

It offers a savings account facility, a share trading platform, a nominee company that compulsorily holds the shares of all its clients and now sells insurance products.

All the way along its pathway Sharesies has continued to attract new capital from valuers who place a price on Sharesies’ potential. Indeed, if you believe those valuations, Sharesies has a greater value than the biggest sharebroking firms, and many of the top 50 companies on the NZX.

The achievement is astonishing. I would never have visualised that it could achieve such an apparent value.

Sharesies might one day be yet another tech company whose progress I have underestimated.

If it were to list on the NZX at a credible value, I might be an investor. As I write that, I hear a Jiminy Cricket voice from my shoulder saying “Did you really mean that?”

I do. Hats off to Sharesies’ success. May it lift the boat of a million people and help them reach a level of wealth that would justify them graduating to the position where they can see the value of paying for knowledge and experience.

The young people who founded the company must have worked really hard, taken real risks, sacrificed plenty — and might now be basking in the land where wealthy people live.

Fantastic!

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THERE are of course other ways to achieve wealth.

One might inherit it, one might win Lotto several times, one might work for an edgy American bank which transfers shareholder profits into vulgar staff bonuses, or one might borrow money and punt on inflation as, say, Bob Jones did in his career in property.

The modern story would also acknowledge those who were early believers in Bitcoin. They have achieved wealth beyond belief.

I have met a New Zealand young man who bought 1000 Bitcoin for less than a dollar each, rode his luck and now, in his 30s, has bought nice houses for his family and works when and where he chooses. He seems to have won dozens of Lotto prizes.

Remarkably, a NZ newspaper alleges that some 300,000 New Zealanders are active Bitcoin punters.

Now, be clear about this.

Various funds allow people to buy NZ$20 worth of Bitcoin (a Bitcoin is around US$65,000) so the 300,000 people do not necessarily own 300,000 coins. If they did own a coin each, it would mean NZ speculators have NZ$32.4 billion at risk on a token that varies in value each day and cannot be used as cash, except in rare cases, often by criminals.

More scarily, that sum - $32.4 billion - would have been nearer $60 billion just five months ago.

I guess the Zimbabwean currency might have had times when its value was even more volatile but suffice to say that the alleged 300,000 Bitcoin users in NZ are not seeking low volatility.

Our chairman, James Lee, in a Taking Stock published in recent months, has warned of Bitcoin’s impermanence. I liken it to non-fungible tokens (NFTs) though Bitcoin is fungible (as are Zimbabwean dollars).

Three years ago NFTs were a fad that attracted an audience of mad punters, mixed with people whose extreme wealth was not matched by any need to assess intrinsic value.

I recall reading of how Middle Eastern oil barons would buy for a million a visual record of a grass-covered paddock, store it in the clouds, and give it to their little “prince” as his own special piece of rural land.

The Sheikhs would pay millions for such a unique visual token, for their little princes. 

One very clever New Zealand woman, skilled in technology, created ten tokens, each displaying a gambolling lamb and offered them to those who owned the cloud-stored grass paddocks.

They all sold, for huge prices. The little prince then had access through the cloud, to a lamb playing in an imaginary paddock. Baa.

NFTs were and are a nonsense, with a market intrigued by uniqueness, rather than by any lasting pleasure of ownership. A stickman, like the Pak n Save advertisement, can be drawn by an untalented artist who happens to be Prime Minister, and sell for thousands of dollars. Baaa.

Bitcoin is hardly unique.

The soothsayers who plot its future path probably know more than those who inspect the entrails of a rooster, but their feathers would be ruffled if those who have borrowed to buy Bitcoins are asked to repay.

I continue to believe that the intrigue of Bitcoin matches the intrigue of tulip bulb traders. 

Holders should see it as correlated to nothing other than the courage of its often-leveraged believers.

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THE Santana Minerals capital raise, announced this week, is likely to be its final raise, providing the company with funds to buy the gear, build the plant, the initial mining pit and the tailings dam, and employ 350 people to work onsite.

Santana will certainly have easy access to overdraft and term loans should the project be consented before November.

It would surprise me if any further capital were needed to build the mines.

Obviously, consent is the only remaining relevant part of the process.

Meanwhile, the misinformation programme will continue, creating noise, but the chosen Fast-Track panel head, Matt Muir, in his distinguished career as a KC and judge, is hardly likely to be swayed by noise. Science and maths will be what his panel considers.

The wholesale placement, to raise A$113 million, will largely be filled by Australian (and North American) institutions. They will continue to be puzzled by media silliness here, but not in Australia.

The retail shareholder placement limited to A$25,000 per head is likely to raise somewhere between A$20 million and A$50 million.

That Sharesies clients (21,000 of them) are not big ticket investors will likely mean that only investors with wealth and confidence in the project will be the main contributors in the retail funding. Their entitlement papers will arrive soon.

My regret is that the 43% of Santana held by NZ investors is likely to fall below 40%, because of the fear driven here, not by science, but by hysteria, often led by the uninformed.

This will not affect the key financial attraction, of all corporate taxes, royalties and PAYE being paid to the NZ government, but it will mean more of the dividend pool will go to Australia.

The workforce will almost exclusively comprise New Zealanders, with iwi making up close to half of it, if mining statistics are a guide.

But until consent is either granted or deferred, or declined, the project remains a "conditional" project.

Full marks to Labour’s Chris Hipkins for making it clear that his party does not reverse consents already granted.

And full marks to Santana, which this week provided details of the processing science and modern mining practices to quell the screeching silly billies. These details, provided by Santana CEO, Damian Spring, should be read carefully.

I would be confident that the mature media would publish Santana’s careful descriptions of the proposed practices, perhaps as an apology for the unmitigated rubbish spouted by various headline-hunters, or click-bait counters.

Spring’s discussion on the science is what the Fast Track panellists will want to read.

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Travel

23 February (pm) – Auckland (Takapuna) – Chris Lee FULL

24 February – Auckland (Ellerslie) – Chris Lee FULL

2 March – Auckland (Ellerslie) – Fraser Hunter

2 March – Christchurch – Chris Lee

3 March (am) – Christchurch – Chris Lee

3 March (pm) – Ashburton – Chris Lee

4 March – Timaru – Chris Lee

6 March – Wanaka – Chris Lee

9 March - Whanganui – David Colman

10 March - New Plymouth – David Colman

11 March - Palmerston North – David Colman

Chris Lee

Chris Lee & Partners Limited

Taking Stock – 12 February 2026

The fast-track panel's decision to take the full 140 working days to reach a final determination on Santana Minerals' application should be seen as a positive and necessary step rather than a delay.

By the time a decision is issued, it will be close to a full year since Santana formally entered the fast-track approval pathway, displaying that the panel is intent on running a thorough and defensible process, grounded in evidence rather than shortcuts and speed.

The purpose of the fast-track legislation was never to bypass environmental scrutiny. It was designed to bring certainty and timeliness to nationally significant projects while retaining a thorough and rigorous assessment.

Proof of this can be seen by the recent draft decision from the fast-track panel not to grant consent for a seabed mining project. While the fast-track process will produce faster outcomes, applicants still face a high level of scrutiny before being able to proceed.

In Santana's case, the panel will be larger than many other consent panels, ensuring that the decision isn't shaped by one or two individuals, but by a broad range of experts with relevant technical, environmental, economic, and regulatory experience. This materially reduces the risk of narrow or ideological decision-making and increases confidence that the final outcome, whether for or against, will be well-reasoned and robust.

Equally important will be how submissions are handled.

The panel can invite feedback from relevant parties, but relevance matters. This is not a popularity contest, nor a forum for ideological advocacy.

It would be inappropriate for shareholders to submit that the project should proceed simply because they support it. In the same way, it would be wrong for opposition groups to submit their personal views that mining shouldn't occur in their back yard. Other venues exist for the expression of such views.

Feedback must be from experts using the latest evidence, rather than based on speculation and claims about potential shortcuts in environmental management. This includes claims that there will be a tailings dam failure that have no basis in the engineering evidence actually before the panel.

New Zealand's regulatory framework is among the most rigorous in the world. Suggestions that this project will operate to substandard environmental controls ignore both our consent regime and the Santana management's demonstrated track record.

The panel's task is to assess facts, evidence, and enforceable conditions, not sentiment or fear.

Ultimately, the fast-track process for Santana is doing exactly what it was intended to do. It's testing the project against environmental impacts, economic benefits, engineering design, and risk management in a disciplined and independent way, within a defined timeframe.

A further development that reinforces the integrity of the process is Santana Minerals' recently executed land access agreement with Central Otago District Council.

Following extensive negotiations, the council has approved access arrangements over council-owned roads required for the project. This agreement relates solely to land access and constitutes neither approval for mining activity, nor disapproval.

The agreement provides clarity and certainty around access while explicitly preserving the independence of the consenting process. The council has been clear that it hasn't taken a position for or against the mine, and that the ultimate decision rests with the relevant regulatory and fast-track panels.

From a community perspective, the agreement establishes a transparent financial framework. Santana has committed to a CPI-indexed annual payment of $1.25 million to the council, equivalent to roughly $100,000 per month, every month, for the life of the mine (once commencing commercial production). These funds will be directed toward infrastructure, environmental initiatives, and broader economic development across the region.

This arrangement shows how local government can engage pragmatically with major projects without compromising neutrality. The agreement will deliver tangible, long-term community benefit which is a significant win for the Otago district.

Separately, there's been some noise recently about the project economics being misrepresented. However rather than being misrepresented, it is likely being understated by the constraints demanded by ASX listing rules.

When Santana published its feasibility study in July 2025, corporate tax payable to the New Zealand Government over the life of mine was estimated at $983 million. At the current gold price, that figure is now $1.7 billion. Estimated Crown royalties have also increased from $410 million to $703 million.

That's $2.403 billion in taxes and royalties alone. And that's before you add PAYE tax from the hundreds of employees who'll be working on site throughout the mine life.

These are material contributions to the New Zealand economy, and suggesting that the economics don't stack up or have been inflated ignores the reality of updated modelling and the very real increase in gold prices since the feasibility study was completed.

It would also be ridiculous for an opponent to claim to know more about the modelling than highly experienced, and accountable, experts.

Concerns about taxpayers being left to cover environmental cleanup costs don't reflect how modern mining regulation works. Western Australia's Mining Rehabilitation Fund, for example, provide an example of how some jurisdictions managed these costs.

The fund covers nearly 1,000 active mine sites. Since 2013, mining operators have contributed A$374 million to the fund through annual levies, yet actual expenditure on failed mine rehabilitation has been minimal.

The system ensures that when mining companies fail to meet their rehabilitation obligations, the fund covers the costs rather than taxpayers. 

New Zealand operates similar requirements, where companies must provide financial assurance covering full rehabilitation costs, protecting taxpayers from being left with cleanup bills. 

A rigorous process is ultimately in Santana's best interest. A consent that's been properly tested is far less vulnerable to challenge down the track.

A consent granted following a robust fast-track process is more likely to endure changes in political climate, judicial review risk, and public pressure. In that sense, the additional time being taken by the panel should be viewed as an investment in durability. It increases confidence that whatever the outcome, the decision will be grounded in fact, legally defensible, and able to withstand scrutiny.

It's also realistic to expect continued share price volatility through this final phase of the regulatory process.

As the fast-track panel undertakes its work, commentary and speculation will inevitably increase, generating noise that may have little to do with the project's actual merits. That volatility is a feature of all such projects at this stage, not a signal about the quality or integrity of the process underway.

At the same time, broader market conditions remain supportive.

Public support continues to build, with more than 22,000 New Zealand based shareholders now invested in the project, representing the majority of all Santana shareholders. The gold price has risen approximately 8% over the past month alone, materially increasing the economic benefit to the country. And recent drilling indicates significantly more gold than what is currently reflected in Santana's modelling.

The direction of travel is positive and has encouraging implications for long-term project value.

For shareholders, this final phase requires a clear-eyed understanding of risk and volatility. Each investor must consider their own risk tolerance and time horizon as the consent process runs its course.

The fast-track panel's role isn't to manage share price movements, but to reach a decision based on evidence from experts, not pressure from advocacy groups on either side.

If the project is ultimately consented, the value created for New Zealand, for shareholders, and through government royalties and tax revenue would be substantial.

That outcome, however, must be earned through process, not assumed.

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Linkedin

If you would like to follow us on LinkedIn, you can do so on the link below:

https://www.linkedin.com/company/107542123/

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Travel

18 February – Christchurch – Johnny Lee

2 March – Christchurch – Chris Lee

3 March (am) – Christchurch – Chris Lee

3 March (pm) – Ashburton – Chris Lee

4 March – Timaru – Chris Lee

6 March – Wanaka – Chris Lee

Edward Lee 

Chris Lee & Partners Limited

Taking Stock 5 February 2026

IN ALL the intrigue and the publishing of interesting anecdotes, one question about gold continues to remain unanswered.

Who owns it?

When gold soared during January to briefly approach US $5,500 an ounce for about half a blink, the equivalent of NZ $9,100, a few blinks later it had returned to around NZ $7,800, a fall of around 14%. (At the time of writing it was an astonishing NZ $8,200.)

The price still seemed robust after that January 30 fall, having begun the year at around NZ $7,300.

The world looked to explain this by referring to geopolitical events, apparently pricing gold each day on the speed of Trump's flipping and flopping.

Clearly the fall was generated by "paper" gold in the derivative markets.

Physical gold has been in such a shortage that supply had almost vanished.

The price had hit such a trajectory that JP Morgan Chase was forecasting the gold price would hit US $6,000 an ounce before 2027, that is a figure of around NZ $10,000.

Elderly women in China were taking jewellery to a public gold-melting machine enabling them to sell their trinkets for hundreds, sometimes thousands of dollars.

All the while governments of the world were switching some of their reserves to gold, thus increasing demand.

Or were they?

In the last four centuries something like 250,000 tonnes of gold have been extracted from rock, or panned from creeks.

Every year somewhere between 2,000 and maybe 2,750 tonnes are produced.

We know jewellery consumes some of this; modern appliances consume a little.

Who owns the rest of the 250,000 tonnes?

It is certainly not New Zealand. We sell our produced gold within days of extraction, largely to the Perth Mint in Australia.

The best figures I can uncover shows that the USA is the largest holder of gold, with close to 9,000 tonnes. Germany, France, Italy, Switzerland, India, China, Japan and Russia own between 1,000 tonnes and 5,000 tonnes.

Call that 35,000 tonnes between the nine largest hoarders of the metal.

Who owns the rest? I have no idea. There is no public data to reveal this. Jewellery is not the missing link, though it would be a large part of it.

It is a fair guess that China owns much more than official figures show.

The Russians claim they are skilled at trading gold, though Putin, like Trump and Idi Amin, is not necessarily accurate at calling the cards in his hand. (Trump and Amin cannot read).

Where is it?

The US government's 9,000 tonnes has a market value of over US $1 trillion dollars though for some reasons the USA values gold at an historical cost, not at market.

The total of 250,000 tonnes at today's price would have a value of over US $27 trillion.

Who owns this?

The market believes China, Russia and others want to create a global currency based on gold, oil and other commodities, to break away from the US dollar, which is devalued by the printing machine (deficits, Quantitative Easing etc), at the whim of the USA. A global currency should not be priced by the whim of one country.

We will learn more of this some time.

Maybe we will then learn who owns the 250,000 tonnes.

Footnote: Santana, if consented, would aim to produce around 3 to 4 tonnes a year for 14 years, or more if gold exploration continues successfully. The mines at Waihi and Macraes produce a similar amount.

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ANY New Zealand investor who monitors the constant announcements of receiverships and liquidations must have noticed that in every case one particular creditor is always identified as a victim.

Of course that is the Inland Revenue Department, which inevitably has not been paid outstanding GST, PAYE, or more rarely, corporate tax. (Companies that collapse rarely owe tax. Corporate tax is a liability only when the company is profitable).

Taking Stock readers may recall that this newsletter has often railed against the inherent dishonesty of collecting money owed to the IRD (GST and PAYE) or others, and then spending it (to survive) rather than paying it to its rightful owner.

The Taking Stock campaign goes back nearly 40 years when several sharebroking firms in Wellington and Auckland collected money from the sale of clients’ shares, intermingled the money with company money, often used the money to pay for shares bought by different clients, and then, through breathtaking incompetence and/or dishonesty, went broke.

After the collapse, the poor client would find the broker had sold shares as instructed, but the client had never been paid, and had become an unsecured creditor with a real problem — dealing with a receiver/liquidator who has to first address secured creditors like the bank or IRD.

The same sort of cheating occurred in law firms and accounting firms. Sometimes there were fidelity funds, provided by all in the sectors to compensate. Fidelity funds exist today only in the memory of old fogeys, a status that may include me.

Brokers, lawyers and accountants rightly went to jail, or at very least went to Coventry, for their cheating.

So what the heck is happening with company owners and managers who steal GST and PAYE tax from the nation’s tax collector, the IRD, now disclosed almost every day? Do they go to jail for larceny?

Today brokers, accountants and lawyers, even real estate agents, are in for a "helping of porridge" if they do not isolate money received on behalf of the IRD, and pass them on at the appointed day.

How come failed building companies, restaurants, bars, cafes etc are gathering up months or even years of IRD money, and not passing the money to its owner?

Of course the first stanza of the explanation is that these companies, by definition insolvent (unable to pay their bills), are intermingling the money with their company revenues and very likely oiling the squeakiest wheel, when they pay any debts, each month.

A key supplier (say wine at a restaurant) will stop supplying if not paid. The IRD it seems will be tolerant. So the wine supplier gets paid by money belonging to the IRD.

The IRD wheel clearly is not squeaking loudly enough. 

Yet the IRD has the biggest bazooka. 

Why is the bazooka’s trigger not working?

Throughout my career, credit control has remained a function of critical importance in virtually every small business, and usually in every big business.

As a 15-year-old working in the holidays for my father’s business, I would make phone calls on the 21st of the month, politely asking if our invoice/statement had been received. That was 60 years ago. Bad debts were almost non-existent.

The IRD must now, as a priority, update its technology so that contact is made with any debtor whose due payment becomes two days overdue.

Early intervention is the equivalent of a very squeaky wheel. 

Penalty interest should begin. The IRD needs the power to put errant companies on weekly payment cycles.

A new commitment to repay the dues must be accompanied by the certainty that the bazooka is loaded, and will be used; Binary; pay or come to court; Not your money! Theft.

GST and PAYE is always money that belongs only to the IRD, as is the case with KiwiSaver deductions from the payslip.

The month or two granted to most companies to minimise administrative burdens by paying this two-monthly was never an invitation to use IRD money as company cash flow. The IRD is not a bank. It is acting for every New Zealander.

The IRD is fortunate that it does not "go broke" when its debtors fail to pay. The burden simply falls on taxpayers.

We are long overdue to stop this.

Talk to your local MP. This does matter. NZ’s available money for social services is insufficient, without allowing inept or dishonest companies to spend what is not their money.

One wonders how many hundreds of millions (at least) are unrecoverable (on behalf of taxpayers) and have to be replaced by higher burdens on those who do not commit fraud, and pay their bills.

Restaurants and bars seem to be prime offenders.

Message to the IRD : go after these cheats before the amount builds up.

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THE former wholesale-only fund manager from Rangiora, Bernie Whimp, did NZ investors a great favour when he caused the Financial Markets Authority to face questions about how they define a "fit and proper" person. The question needed raising.

Whimp, in my view just a public nuisance, has had his empire closed down by the FMA. He has responded by seeking to fight the FMA, claiming their use of a liquidator will mean that of the $50 million he had raised, investors might lose around $20m, because of enforced sell downs of his plans and investments.

He now is extremely chatty on a forum, right down to his low opinion of some of his former staff. He says he employed 44 people, a few of whom were duds.

My comment on this is that if he was carving off an (excessive) 3% fee for managing $50 million, his income would have been $1.5m. 

Forty-four staff each being paid $35,000 a year would cost $1.540m. A salary of $35,000 sounds credible, given the outcome, but income of $1.5m would not be enough to cover the lease cost of a range of staff vehicles, let alone anything for him.

For comparative purposes, successful managers of other people's money usually manage "billions" and usually charge far less than 3%. They attract useful staff by paying a tad more than what his arithmetic looks like (but may be misunderstood by me).

Whatever, the fit and proper person issue raised is important. Thanks to Whimp for being the catalyst for a deep discussion.

Now we have a second issue stemming from Whimp. Again, I thank him.

The Commerce Minister, Scott Simpson, is publicly discussing the need to protect investors with new clarity about the definition of a wholesale investor.

Whimp says the majority of his few hundred investors were "wholesale". I take that to mean they were experienced and knowledgeable, that they conducted sensible due diligence and they were skilled in weighing risks and return.

By definition they must have selected Whimp as their fund manager after, at very least, a Google search.

My view is that Simpson is exactly right to revisit the optimal means of allowing wholesale investors to be accurately defined and certificated, then differentiated from retail investors who need protection.

What wholesale investors will not be are people with some money from one-off events, like selling a house or a business, unless they display a history of making unlisted investments based on intelligent due diligence and risk/return analysis.

They will not be people who happen to be in a well-paid occupation, but have no relevant investment knowledge.

They will not be people who do not have access to skilled advisors.

They will not be people who become excited by newspaper advertising and are influenced by offers of high returns.

Commerce Minister Scott Simpson is well aware that at least 30 lawyers and accountants have been identified for endorsing wholesale investor status, without any real assessment of their skills, or their ability to withstand capital losses. Presumably, they will be dealt with, shortly.

Those lawyers and accountants who sign such certificates for $105 plus GST may be, should be, charged with fraud, for false certification.

There are not many reasons that I can imagine for thanking Whimp’s presence in financial markets, but I sincerely would thank him if the regulators soon, very soon, were to call me in to discuss what I have learned about wholesale certification, and the qualities of fit and proper financial market people.

Asked to demonstrate “experience” one investor wrote that he had a KiwiSaver account, ergo, a wholesale investor.

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While Simpson is thinking of investor protection, he needs to focus his mind on the responsibility of those newspapers who advertise offers that are either illegal or clearly absurd.

Newspapers in the South Island have often accepted the money, published absurd offers, and claimed no responsibility when investors were subsequently ripped off.

One of the country’s finest legal minds sees this subject as in need of resolution.

Of course the media needs advertising revenue. Where is its accountability for recklessly promoting illegal or improbable advertisements?

How come a newspaper could run an article about the fraud in, say, Bridgecorp, and two pages later run a half page advertisement for unsecured notes investments ………... in Bridgecorp?

Check out the Christchurch Star, a giveaway paper, and some of its advertising in recent years.

Is it time to test liability in a formal setting?

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Travel

12 February – Lower Hutt – David Colman

18 February – Christchurch – Johnny Lee

2 March – Christchurch – Chris Lee

3 March(am) – Christchurch – Chris Lee

3 March(pm) – Ashburton – Chris Lee

4 March – Timaru – Chris Lee

6 March – Wanaka – Chris Lee

Chris LeeChris Lee & Partners Limited