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When quality projects start answering questions

It is only three months until Rick Rule takes to the podium at the Mining Journal Select London event, but he is already dishing out advice to investors looking at the next crop of ‘quality’ undeveloped projects.
When quality projects start answering questions When quality projects start answering questions When quality projects start answering questions When quality projects start answering questions When quality projects start answering questions

Rick Rule thinks investors need to assess their risk tolerance and time horizons before investing in mining projects

Staff reporter

Management teams representing projects picked from the Mining Journal Intelligence database - a list of quality undeveloped assets from more than 2,000 listed companies - will be presenting at the event in London on June 26-27, and they will be looking for investors to back them. 
 
While Rule knows exactly what he is looking for in a undeveloped project - several of his current investments happen to be on the Mining Journal Intelligence database - he realises not all investors have his appetite.
 
"I think the investor - given the risks inherent in mining and the time that is required to develop and beneficiate a deposit - needs to follow a theme [with their investment] that is concurrent with their own time preference and risk tolerance," he told Mining Journal.
 
Rule, who is down to talk about how the current market is impacting investor decisions at Mining Journal Select London, is well known for sticking with projects over a five-to-seven-year timeframe, often entering a company's share register during bear markets and coming out the other end with a handsome profit.
 
 
This timeframe is not suitable to all investors.
 
Rule is also cognisant he has more tolerance for perceived political risk than many of his peers, admitting he "would rather a tier-one deposit in what is perceived to be a tier-three country than a tier-three deposit in what is perceived to be a tier-one country".
 
He has made money out of following companies into the likes of the Democratic Republic of Congo and Mongolia - jurisdictions not all investors are comfortable with. 
 
Regardless of how willing an investor is to follow Rule's blueprint, he thinks all interested parties need to be aware of where the 'value add', or upside, tends to come in the undeveloped project cycle. 
 
"You add value in our sector by answering unanswered questions. The preliminary economic assessment might answer - in a general sense - some unanswered questions. The prefeasibility study answers other questions, the bankable feasibility study answers other questions, the acquisition of project finance answers another question," he said.
 
"Investors … need to understand that their own time preferences - if they are going to be successful - have to align with the requirements necessary to answer a series of unanswered questions."
 
Fortunately for investors, the projects on show at the Mining Journal Select event still have many unanswered questions. All projects will have a basic economic study to hand that investors can get to grips with, but there will be plenty of upside opportunities down the line.
 
Cardinal Resources (AU:CDV), for example, has only recently published a preliminary economic assessment on its Namdini gold project in Ghana.
 
It looked at three potential throughput and gold production rates within this early-stage study, but will refine the strategy further in an upcoming prefeasibility study.
 
The same is true for Trilogy Metals (CN:TMQ) and its Arctic copper-zinc-lead-silver-gold project in Alaska, a project South32 (AU:S32) is keeping tabs on as part of an option agreement the two struck in April 2017.
 
Trilogy believes Arctic could be among the world's highest-grade openpit copper mines when built, but it is currently at the prefeasibility study stage.
 
And, there are still milestones to tick off at Metals X's (AU:MLX) Maroochydore oxide copper project in Western Australia, and Savannah Resources' (LN:SAV) Mina do Barroso lithium project in Portugal.
 
All of these companies will be presenting at the Mining Journal Select event and investors would do well to find out just when those unanswered questions will be answered.  
 
The dedicated Mining Journal Select event website is available here.