the interesting thing about "risk" in this circumstance is that there is a strong geological aspect to the risk at Daniels that I believe joe punter will not get a handle on.
the geological connection between the adjacent operating diamond mine (name?) and the gravels at Daniels is very very logical in a geological sense. this logic has already resulted in the market cap of TAW already being healthy considering not one diamond has yet been found. the industry is voting on the probability of success in some manner already.
the geological logic at Daniels is inescapable and I agree with your sentiments on this stock about its upside. But how is the risk addressed?
I approach "risk" with stocks with probabilities. Oil stocks quite commonly have a risk factor of only 1 in 3 and a good well is 50/50. Oil companies are very open about disclosing probabilities of success for each well.
The relevant question in my view for TAW is "what is the probability that Daniels will contain diamonds?"
as a norm I do not punt on the results of oil stocks drillign wells as the odds in most cases are less than 50% and the return from each success insufficient to cover the losses.
How would you rate the probability of diamonds being found at Daniels is it greater than 50%? In my view it is, but what is yours view? I bet if you rang the MD of TAW today he also would have a view.
acturtle
TAW Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
