When you do a valuation analysis of a junior explorer at the end of the study you need to assign a “geopolitical risk discount”. This has to do with how dangerous it is to operate in certain countries as well as the chance of getting your project “expropriated” or stolen by the local politicians usually to curry favor with the voting populous.

Just this week we saw this play out in Zimbabwe wherein the dictator Robert Mugabe is forcing the mining companies with over $1 in assets to sell at last 51% of their assets to the government at a price at which the government is willing to pay. Ouch! Rio Tinto and Anglo’s platinum operations seem to be the most affected although many of the juniors could be all but wiped out. Unfortunately for many in the mining sector a lot of the recent discoveries are in areas run by corrupt politicians because most of the discoveries to be made in the safe countries have already been made. I'm happy with my sfmi here in the USA!