Yesterday I sat on a plane and could not avoid watching the computer of the fellow across the aisle and one row up. He was performing a risk assessment on his mining project. At first the risk categories of ore reserve and construction yielded the highest numerical risk. He was dissatisfied with this conclusion, scratched his head, and returned to the screen to fill in the text box for regulatory risk. He worked at that a while and in obvious satisfaction stopped when the regulatory risk number significantly exceeded all the others.
Would it constitute insider information, if I were to sell my shares on the basis of what I saw on a plane in full public view?
The point of this story is much more than the obvious: don't do confidential stuff on your computer in public. The real point is to take with a big dollop of salt anything you are told about project risk. It is as much likely to be true as to be propaganda concocted by some high-flying miner.
Not that regulatory risk does not occur: consider Kislidag in Turkey, Gold Reserve Inc.'s missteps in Venezuela and Inmet in Spain. Not to shudder at the complexity of working with the federal fisheries folk in Canada.
Point is when deciding to invest in a new mine that is going to need to get permits from finicky regulators, try to assess the impact of those finicky regulators on the chances of success or risk of failure of the project. But also take into account the fact that it might be all too easy for an incompetent mine developer to blame the regulator rather than himself for the failure of the project.
Afterall we are all human and all fly high with computers at some time or other.