caveat investire

No holding the speculators.

Robin Bromby | October 12, 2009
Article from: The Australian

WELL, we're not so much ringing the bell for the top as just whispering a warning: caveat investire. That, for other than Latin scholars, means “let the investor beware”.

Froth, nearology, hype and hope abound in the junior resources sector, signs that too many in the market are in danger of losing their heads. Losing your head in the market almost inevitably means losing your money as well.

A frisson of alarm was experienced this morning when stock in Epsilon Energy (EPS) leapt by 80 per cent on news that some ground had been acquired in Guyana prospective for uranium.

Well, it is true that this is an interesting development for the company. The project is located in the only English speaking country within South America and there is a large geological belt that runs through several countries, but is accessible by foreign companies only in Guyana. Venezuela is no place to invest and Brazil will allow only state-owned companies to be involved in uranium exploration.

Yes, too, several North American uranium companies are involved in Guyana, one of the more advanced being U308 Corp. And uranium has been identified in some places by the Guyana Geology and Mines Commission.

And, finally, the land Epsilon is acquiring does have some interesting indicators.

But, people, get a grip. One, any uranium development by EPS is years and years away. Two, this company has been long on uranium promises since it listed in 2006. Three, there may be political opposition to uranium mining in Guyana. Four, the country is not exactly a beacon of economic management, with the capital now experiencing serious electricity shortages.

In brief, it is a potential interesting acquisition but does it really call for a stock to nearly double on the news?

But anything goes at the moment.

Last Thursday the price of Richmond Mining (RHM) shot up 50 per cent on a classic piece of nearology. The company said it was about to start a “significant exploration program” at its Narracoota project north of Meekatharra, WA. The reason for the stock explosion? Because Richmond helpfully pointed out that they were just 75km from the potentially big DeGrussa copper discovery made by Sandfire Resources (SFR).

So near yet so far.

It’s dangerous days out there folks. Caveat investire.