At this year’s PDAC, Brian Leni discussed the benefits that investors can reap from putting their money into “risky” jurisdictions.
On day one of this year’s Prospectors & Developers Association of Canada convention in Toronto, Brian Leni, founder of the Junior Stock Review, spoke to a room of investors about why risky jurisdictions may hold the key to unlocking success within the resource sector.
Leni said that one of the ways to find success in the resource space is through exploration — the crux of why he believes that risky jurisdictions can be an attractive investment.
“A good discovery pays no matter where you are in the market,” Leni stated.
“Arguably the two most important factors are people and jurisdiction,” he added.
Leni explained that investors must have faith in the people involved in a project as much as the area that the project is located. He also revealed that the highest profitability for the next big deposit will come from jurisdictions that have risks associated with them.
“Whether it be war, an outbreak of Ebola or general civil unrest, the risk to capital in … questionable jurisdictions has in many cases greatly diminished exploration and development, leaving the door wide open for those with the fortitude to recognize the opportunity,” Leni said.
He also noted that the five most important factors for determining what a profitable jurisdiction may be include culture, government, geography and infrastructure, as well as timing and the flow of cash.
As an example, Leni said that Ecuador is a jurisdiction that comes with risks, but has the potential to bring investors the kind of economic prosperity they are looking for.
“One of the big reasons why I think the window of investment is opening in Ecuador is the election of Lenin Moreno,” he said. “Although his political ideologies seem to be shifting to the left, he has publicly stated the need for Ecuador to attract mining investment.”
In terms of what mining company Leni has put his faith in when it comes to risky jurisdictions, he says that investors should start looking at Adventus Zinc (TSXV:ADZN,OTCQX:ADVZF), as its strategic alliance with Salazar Resources (TSXV:SRL) has yielded significant amounts of copper,gold, zinc and silver at the El Domo asset in Ecuador.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.