A bubble

The Guardian has a story on White Nile -- a stock that is doing very very well. A little too well... bq. Week the City caught White Nile fever A speculative Sudanese mining stock has bowled investors over bq. Phil Edmonds' Test match bowling average of 34 was hardly distinguished, but the former England cricketer is now producing mind-boggling numbers. His �15,000 investment in White Nile, a company looking for oil in Sudan, has been transformed in a fortnight into a stake worth �20m. bq. It's a theoretical price, because trading in the shares was suspended on Wednesday. But, given that one of his other African mining companies also invested, Mr Edmonds can claim to have boosted his net worth by an average of about �1.5m a day this month. bq. After just four days trading on the Alternative Investment Market, White Nile is already a legend. The surge in the shares from 10p to 137p took the company's valuation to �212m, despite its sole asset being �9m of cash. It was an absurd over-valuation and proved White Nile fever is as dangerous and inexplicable as the speculative madness of the dotcom years. The problem? bq. Yesterday was meant to be the day that White Nile revealed all. On Wednesday, the company said it had agreed to buy a 60% interest in a 67,500 sq km block in part of the Mugland basin in south Sudan and would elaborate further. It waited until 5.10pm yesterday to announce that it had "not yet been able to prepare such information". Wait until next week, it said. bq. White Nile may have something interesting. The problem is its �200m valuation. The political risks look real. The autonomous government of south Sudan was established only last month after 20 years of civil war. Even if the seismic results from the field are promising, more cash will be needed to build roads and other infrastructure in the area, notably a pipeline to carry the oil. Yeah - they are a company with no physical assets except the ability to secure a parcel of land which may or may not contain oil. Could be a great find -- the Sudanese could be sitting on a pool of oil that makes the Saudi resources look like a puddle. Then again, they might come up with dry well after dry well.