The case of two gold mine developers

Sabina has the lower political risk, which ultimately meant lower total risk

A few months ago I was considering funded gold mine developers Sabina Gold & Silver (SBB.TO/SGSVF) and Rio2 (RIO.V/RIOFF) and added and briefly held RIO due to some right minded fundamental input I got from a couple of people, who stated that RIO’s much shorter time to production was its advantage over SBB. I have not held either of these, or frankly much in the way of gold stocks since then.

But today RIO was served some unexpected news that reaffirms my aversion to much of LatAm for investment, not because I have a blanket or one size fits all view of its political landscape, but because I don’t have nearly the sophistication required to understand the ins and outs.

I think Rio’s Alex Black is a first class operator. But he cannot outrun politics. So for me, it’s much easier to look at North American and maybe a few Mexican or African prospects and leave it at that.

It turned out that RIO’s risk profile – proven in hindsight – was much higher than Sabina’s. One is getting obliterated while the other…

…is just getting hit with the same ugly stick the whole sector is during Inflation Unwind 2022.

When it is time to buy the miners seriously, I’ll stick with regions I know for more speculative smaller miners and quality established larger ones that are not materially impaired when one permit is delayed or worse, killed by politicians about whom I have limited understanding. Meanwhile, the above is another lesson (learned the hard way in the past) reaffirmed.

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