Firstly I shall address your hypothetical situation. It depends what you mean by a better locale. There is a popular model or heuristic which places political risk in two bands: a low band in developed countries, and a high band in lesser-developed countries; then there is internal variation within these bands. I do not subscribe to this model.
There are so many aspects to political risk from all levels of government, national, provincial and local, to local grass roots support or opposition, and NGO's, environmental legislation, and other activist groups. Then there are the laws of international trade, tariffs, sanctions, etc. (Take a look at a 10-K or Annual Information Form for a description of some of the almost limitless potential risks to mining anywhere.)
Generally, more developed or affluent, more densely populated, and more environmentally-sensitive or tourism-dependent areas are less likely to support mining. In many parts of most developed countries, it is not easy to obtain permits for resource extraction. When it is, it often takes a lot of capital for studies and consultation, and many years to complete arduous permitting processes, both of which can obliterate the net present value of a mining project.
It is true, on the other hand, that in many lesser-developed economies there are fewer political and legal checks and balances, i.e., power tends to be more concentrated. In some cases, one or a handful of people have the power to make dramatic legislative or even constitutional changes which could have a material adverse impact on project value.
People tend to think in black and white; whereas, most events have both fractional impact and fractional probability. As I pointed out, outright expropriation without compensation is relatively rare. When it does happen it is often a mistake because it discourages foreign direct investment and international trade, which may be helpful or necessary for economic development. That it is not in a country's or government's best interest is not a guarantee that it will not happen. However, recent examples show that international courts with recourse to export seizures under maritime admiralty tend to side with foreign investors who have been treated unfairly. Here I am referring only to the most extreme cases. I recall reading a list of hundreds of cases of eminent domain, or resource- and industrial nationalism, over the past century. This included state expropriations (seizure without compensation) and nationalisations (seizure with compensation, often below economic value or cost). These have happened in almost every country of every socio-economic echelon. They occurred often in war time, but many also occurred in peace time. Crucially, these high-severity political events are of relatively low frequency. This is important because immutable risk at positive price is limited to the prospect of total loss. All partial losses may be discounted. As I pointed out, there are often adverse developments in capital costs, operating costs, development time, and political factors such as taxation and other regulations. But I argue that in this instance these are well more than fully discounted in the share price. Risk other than existential risk is a function of price. Simply put, these shares are priced for extinction.
The foregoing did not really answer the question asked, but what I think is a more important one, that of the probability distribution of intrinsic value. As to the question of what the market is discounting, I think it is arguable that the market is not discounting political risk, but rather, sectoral neglect, disinterest, or apathy. Metal prices have only begun to rebound, and have not attracted general investor interest. I needn't revisit, I think, the point about the dual forces of rising metal prices and falling discount rates which add to produce industrial cyclicality. The other factor is stage of development. One may wish to invoke the M-curve model of mining equity returns. That is, ceteris paribus, exploration, when successful, produces high returns; development witnesses low- or negative returns; construction to commercial production witnesses high returns; production produces lower returns. These tendencies are not in reference to internal or operational returns, but rather to trends in market capitalisation. Ivanhoe is hard to place in this model, in that it is exploring, developing and constructing. Anecdotally, the current Ivanhoe had roughly 500 million shares outstanding at over CAD $5/share when the loonie was at greenback parity just past the peak in the commodity cycle, in late 2012. This amounted to a market capitalisation and enterprise value, in US dollars, roughly equal to that of the present day. This was when the projects were far less advanced, and before the firm struck the mother lode at Kakula. For another comparable, the previous Ivanhoe, which held two-thirds of the Oyu Tolgoi copper-gold project in Mongolia, discounted 5% at peak metal prices in 2011, prior to production. These historical phenomena would seem to argue not only for limited market attention to political factors, but also to the lack of importance of stage of development. Indeed, it seems that commodity prices, and concomitant implied profit and discount rate, are paramount to market appraisals.
Secondly I shall address the extent to which this discussion is hypothetical. There is an adage: gold is where you find it. From a geological perspective, such assets, while not likely to be found anywhere, are highly unlikely to be found in what many readers may consider a familiar or comfortable jurisdiction. To my knowledge, nothing close to a 20 metre-thick reef of PGMs has been found outside of South Africa's unique geology. Geologic settings with high PGM values such as the Sudbury, Thompson, Norilsk, and Jinchuan igneous complexes are arguably more mature and require new insight or technology for exploration success. A 10 metre-thick reef grading 10% copper and running for miles along strike, while extraordinary in the Central African Copperbelt ("CAC"), is unheard of anywhere else in the world. Perhaps when technology advances to the extent that minerals may be mined from 10 kilometres underground, such assets will be found in more mature camps. However, for now, the CAC is elephant country for high-grade copper. An ore body weighing in at 10 million tonnes and grading over 40% zinc-equivalent, while arguably not conceptually unique to Katanga, is rather extraordinary, and yet these are the spoils after nearly a hundred years of mining since the Prince Leopold Mine opened at surface, with an 18% copper head grade, in 1924.
I cannot say that risk is not present, but neither do I know of a risk-free investment. Mining, and especially exploration, is described as a high-risk, high-return business. I would contradict this, and say rather that it is a business with a return of low expectation and high variance. However, this does not take into account quality and price. I have argued for exceptional asset- and management quality, both of which I believe to be structurally undervalued. Ceteris paribus, the higher the quality, the higher the expectation, and the lower the variance, of return. Contrary to the implication of the Capital Asset Pricing Model, for which market efficiency is axiomatic, ceteris paribus, the lower the price, the lower the risk, and the higher the reward. Investors are always fighting the last war. Sometimes stocks are too cheap.
The most dangerous place is also the safest one.
— Chinese Proverb -