RE: RE: Aurelian in Correa's EcuadorThe question you have to ask yourself is whether the Aurelian management would have cut and run like they did if the rightist had won the election.
It's not my intention to deramp Tinka, and I wouldn't like to think of people selling shares in it only to see them outperform at a later date. But however many ounces in the ground, any mining investment depends on key fundamentals, and one of them is that you don't have a government running around causing uncertainty and infringing on miners' economic rights.
Humala may start slow, but the very best Tinka shareholders can hope for, imho, is a truly swingeing, extortionate increase in royalties and general taxation. I'd be surprised if Humala doesn't start fully nationalising something. It doesn't need to be Tinka or even Tinka's sector for general sentiment to turn down hard. That's the context in which management may decide to throw in their cards and start again elsewhere.
What new investors are going to come into Peru mining shares now? You'd be mad to; there are other silver mining investments to be made elsewhere which can be made without a black cloud hanging over the stock and the country.
I guess that Tinka will sell down hard on this news, and then there may be a correction as people see a great story oversold. But like Aurelian I just don't see the chances of a happy ending; if silver goes to $100+ do you think Humala is going to sit back and let shareholders enjoy the cream of that?
Maybe only a big company like Kinross (as in the case of Aurelian) has the negotiating power with the government to take on a valuable resource - but they're not likely to pay top dollar for it.
I feel bad for Tinka shareholders. I've been in this position. You've got to make your own decision. Don't blame me if you sell and then watch from afar if/as the company unveils major new ounces and goes from strength to strength. Anything is possible.
If I were in the position of a Tinka shareholder, at the very least what I'd be doing is scouring analogous silver miners in more optimal jurisdictions.
GLTA