Sometimes investing is the hardest game around. Whatever form your research/analysis takes , the objective is the same. Namely to try and find a stock that offers high return and low risk. This goes against every principle taught to business students that high returns are only available with increased risk.
Sometimes we stumble across something that seems to good to be true and are inclined to dismiss it because there must be something wrong.
The basic boxes we like to tick are something like the following:
Good management
Good project
Good commodity
When we find a stock with these basic attributes it is typically fully or even overvalued.
What we have with this stock is as follows:
Commodity - Platinum used widely in climate solutions such as limiting fuel emissions (catalytic converters)
Project - Condoto in Colombia. Original source of world platinum for many many years before political issues overtook. For many years since Colombia was a no go area for international miners. However the new govt have done an excellent job trying to restructure the economy. Mining now forms a significant role in the rehab and rebuilding of Colombia. It was recently rerated to investment grade Baa3, the same as Brazil.
Management - A dream team,
Ed Nealon ex chair AQP (renowned global expert in Platinum)
Bill Hayden Right hand man for Robert Friedland, plus director Ivanhoe Nickel and Platinum (Canada)
Phil o'Neal Ex CEO Sunward Resources (went from 2c to $2)much experience in Colombia and Canadian capital markets.
This management team have a very wide following and would not waste time on a small junior.
Risks
Colombia
Alluvial platinum - so unless the hard rock source is discovered it is unlikely they will be able to define a resource.
Historic mining area heavily populated by artisanal miners - how much ore is left???
Liquidity
But the clincher is the valuation of this company - still only approx $30m.
Anecdotal evidence is that before being locked out the artisanal miners were extracting 50kg of platinum on some days from the paleochannels.
Much work remains to be done and by the time people are aware of this it wont be so cheap. DYOR
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