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6/27/16

Sell Dalradian Resources (DNA.to) (from IKN372)

A segment from IKN372, out last night:



Dalradian (DNA.to) and Brexit
Fallout from the UK’s decision to vote Leave last week will come in all shapes and sizes. In the great scheme of things what follows here is a tinysmall consequence compared to the massive issues now on the table such as EU membership, the new political leaders of parties in the UK, et cetera and so forth. But it is our focus subject and we’re also talking about a company we’ve covered on these pages as well as traded (with reasonable success too), Dalradian Resources (DNA.to). Though small, this is a practical consequence of the Brexit vote and our field of interest, so here goes.

It's way too early to be dramatic about the future of Northern Ireland and the ramifications from the Brexit vote result are only starting to show. Therefore I am not talking about clear negatives such as a return to hard borders between North and South, the vote for a reunification of Ireland (though Sinn Fein will push that agenda as from tomorrow in the Irish parliament, it's the party's basic raison d'etre after all), a split from the UK nor even more stressful things such as troops on the ground to quell any resumption of sectarianism (the Catholic/Protestant issues of the country aren't counted in decades but in centuries, yes things are much better now but multi-generational conflicts can be tough to extinguish completely).

I am not considering any of the potential bad cases, for Northern Ireland in general or Dalradian specifically as they are too far in the future to consider seriously for a junior mining company investment. However we must be clear, what this does do is add a significant amount of political uncertainly to business investment in Northern Ireland and that includes DNA. In our focus company's case it's worse, as right now DNA is on the permitting track and in the period when it wants political and authority certainty, from which it goes to market to raise capital (or sells to the highest bidder). Who will be governing the land in two years' time? In five? That's the timescale a mining project such as Curraghinalt needs. What will the laws be? Will previously awarded permits be recognized? Will local grievances become louder? What will the exchange rate be for the pay of workers at the mine? How much tax will the company pay? A hundred other unknowns have suddenly shown their head above the parapet. The Curraghinalt deposit and project is one thing, but its political situation has suddenly taken a turn for the worse. The IKN Weekly's recommendation is to avoid exposure to Dalradian Resources (DNA.to) until such time as the political future of Northern Ireland is better understood. Yes, that means sell if you still own shares and as a post-script, that call goes for other Northern Ireland exposed companies such as Galantas Gold (GAL.v). Even in a best case situation DNA (and GAL and others) aren’t going to benefit as much from the safe haven interest in gold as other juniors, transferring any cash from these to other similar stocks working other countries is a simple and practical call.