Political Risk Cannot Explain Low Share PriceStar Searcher,
Last year share price was at $5, despite the fact copper was only $2.65 lb. There was the exact same level of political risk. When the new mining law was first announced in early January, KAT, a company on the same region of Congo as Kamoa-Kakula, really went on a tear, going hyperbolic. It eventually fell back, but I think this undermines the political risk argument as a rationale for poor stock performance.
Perhaps above $5 political risk is the major factor keeping share price from rising to $8 $10, or $12. Yet notwithstanding our discussion, nothing can account for the drop to $3. It's exactly the same country as last year. More is being made of this issue than is reasonable. There is political risk, but these mines will get built because regardless who is in power, government desperately needs the money. Even in a worst case scenario of 3.5% royalties (up from 2%) and 35% corporate tax (up from 30%) it does not justify a drop from $5 to $3. There are proposed windfall taxes, yet these kick in at relatively higher levels.
The drop in share price is inexplicable. I do think it was engineered, and market operators simply walked the price downstairs in a thinly traded market. 3 or 4 million shares a day is fairly low volume. They wouldn't need to own the stock, just control daily price action. Bimonthly short reports will only tell part of the story.
Of course, everyone would like to see accountable and transparent, democratically elected government. Good government is always preferable. However, the lack thereof doesn't begin to explain the recent steep drop in value. As these gold equivalent calculations show, K-K is worth an absolute fortune. And there are two other mega projects, Platreef and Kipushi, which are outstanding in their own right. We don't know who the sellers are or their motive.These properties are worth many billions of dollars. People rob banks for a lot less. Perhaps someone is attempting to trigger a cash liquidity crisis within the Company and compel a fire sale on one or more of the assets, either in the form of cheap shares or partnerships.