I have been in the resources industry investment game for a long, long time and have learned a great deal from my experiences, PARTICULARLY my mistakes, and there have been many of those. For example, I have been caught up big time in hyped stocks and haven't pulled the ripcord in time. I have mistakenly invested heavily on conversations with CEOs and Chairmen, and been forever hopeful that an undervalued tier 2/tier 3 mineral resource would attract capital investment in a supply-compromised market. I have mistimed my entry and exit to a commodities cycle. Those are just a few examples where I have f...ed up and learned the hard way.
I started investing in resources industry stocks in my teens and was involved with the industry for decades. I have seen a great deal over the years and know that a KEY investment criterion is the quality of a mining project's resource. Obviously there are a load of other very important variables including:
1. The quality of the company Board and management.
2. The condition of the global economy and its outlook.
3. The forecast supply and demand fundamentals for the commodity(s) the project will exploit.
4. The potential threat from substitutes to demand for that commodity(s).
5. The location of the project and associated sovereign risk, environmental risk etc.
6. The project's finance risk.
7. Project metrics including CAPEX ,OPEX and particularly the project's anticipated position on the global cost curve.
8. The project's potential for expansion and economies of scale - driven by market demand and resource factors.
The biggest worry for me with the Maricunga project has been No.5 and the potential influence of Codelco on the Chilean Government. My concerns were validated by the previous government's behaviour in its last week of power, but my faith has been restored by recent actions of the current regime.
Considering the current and forecast global macroeconomic environment, and the gathering momentum of the EV and other battery revolution, being invested in LPI is a great place to be. It ticks all the boxes, and at current prices presents a great buying opportunity IF one is willing to be patient. I firmly believe LPI has the potential to be the best, long-term resources industry investment I will make in my life time.
Promotion can only go so far, strong project fundamentals are far more important and is what sustains a project. I have a rather intensive work contract commencing Monday and consequently will be largely absent from HC in coming months. In the meantime, good luck to all LPI holders. Stay patient and you will ultimately be rewarded.
LPI Price at posting:
30.0¢ Sentiment: Buy Disclosure: Held
