Lycopodium Ltd (LYL.ASX)

Anyone who knows the mining industry will tell you that Lycopodium is synonymous with mining feasibility, design and technical studies that need to performed before a project can secure a mining licence or financing. There is no question that during a commodities boom like the present one, there are likely to be a lot of staff leaving your business to set up their own consultancies. I know its happening because I see all these new names in the industry compared to 5 years ago when there were only a hand-full. The implication is that companies like Lycopodium are having to pay more to retain staff, or needing to outsource to pay more to outsource to staff that previously worked for them, as well as paying the price for the higher staff turnover that these disruptions cause. The flipside is that the problem is industry-wide, so these engineering consultants are able to pass on the costs to their customers whom are earning record prices for commodities, or are well supported by equity markets for capital. These large companies are also tending to pick up the larger more lucrative contracts, whilst the recently departed fight over the scraps, and maybe do a bad job besides.

There is no shortage of work for mining consultants, and companies are always going to sign up those that have a good reputation and can do a good job. Thus I think buying into a mining consultant like Lycopodium makes good sense when they fall back to trend support (see chart). See Google Finance and my discussion forum for more information.
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Andrew Sheldon www.sheldonthinks.com