crisis, what crisis?, page-48

Defplayer,
We all have the option to either believe that behind every door and around every corner something evil may be lurking or take the opportunities as they arise. Certainly in these days of extraordinary market volatility and unprecedented uncertainty there is a natural tendency for many investors to want to just close out many of their investment positions. With the increased level of anxiety, investing for some people becomes like being lost in the deep fog and the coast is never clear. Certainly, the media beat-up of controversial draft proposal of sanctions against Eritrea has not helped and some STB investors rushed to sell-out rather then take time to understand the situation and rationally assess the impact of the political manoeuvrings on their investment. Unfortunately, when it comes to Africa, most Australian investors consider nearly every country on this continent as high risk. And certainly there are few posters here who keep promoting and recycling this fear campaign. As already highlighted in my previous posts, the probability of any sanctions being implemented against Eritrea was always going to be low. Recent report by Reuters has come to similar conclusions. Hence, I believe that current valuation of STB is incredibly low considering the following:
- the size of potash resources it holds (one of the biggest in the world)
- the unique nature of this deposit (i.e. the only potash deposit that can be mined by open cut mining methods – hence the lowest operating and capital cost in the world)
- highly favourable long term demand dynamics that is leveraged to the global population growth
- potential for high production rates and the very long mine life
- highly favourable location in regard to potential end customers and short distance to the seaport
- highly appealing corporate appeal. Whilst I would love to see this project to be developed as stand alone mine, the strategic value of this deposit means that it is highly likely to be taken over by a major potash producer or end user well before it gets to production (i.e. India or China)
- clear and high quality mining law as well as supportive environment and conditions for mining industry in Eritrea
Nevertherless, I’m not totally dismissive of political risks, although I do not believe in some of the doomsday scenarios being drummed-up by some posters. I also re-call a very sensible comment by one of the posters before who stated that “investing in Eritrea should be done with cautious and measured approach”. Altogether, current share price represents buying opportunity for me.