The truth is that investors who look like me, old and Caucasian, tend for some reason to believe that money that’s stolen from us in English, according to the rule of law, is somehow less gone. So I’m not afraid of bad jurisdictions, it’s just I’m also afraid of so-called good jurisdictions. And what I’ve learned is that in jurisdictions where capital feels comfortable, a lot more exploration has taken place, which means that the probability that I’m going to find a high-quality deposit in a jurisdiction that I’m also comfortable in is very low. The probability is that I’ll find the type of deposit that will give me the returns I’m looking for—1,000% plus—are much more likely to occur in jurisdictions that have not been looked at as thoroughly.
Perhaps my most important mentor in the 1970s told me that in exploration, money is made employing new ideas in old places—that is, new technology—or old ideas in new places. But if you’re using old ideas and old places, you’re assuming that you’re smarter than everyone that came before you, which is usually an incorrect assumption.
So, as an example, investments around the application of new technologies like three-dimensional seismic measurement while drilling, and new fracturing and recovery techniques, have revolutionized the old oil fields of West Texas. That’s a new idea in an old place. But old-fashioned exploration technology—that is, projection of existing trends, things like that—work well in places like Congo and Kazakhstan, places that haven’t been explored thoroughly for 40, or 50, or 60 years, as a consequence of challenging social, economic, and political circumstances. So I would say that while I’m certainly cognizant of political risk, I define political risk much differently than many of my competitors."
- Source, Rick Rule of Sprott