On the 28 April 2008 Resource Investor reported that Rocmec is looking at gold mining prospects in Peru and Quebec. I am no judge of the NI 43-101 reports they have in hand to substantiate their numbers. And to be honest, I would not invest in Rocmec solely on the basis of these reports. If I were of a mind to invest in Rocmec, I would first look at the political risks they face in developing in these two jurisdictions. Thus let us pause for a minute to refresh ourselves on the nature of political risk.

Political risk may be defined as the risk that a host county will take action or fail to take action that interferes with a foreign investment. Examples include expropriation by the government or seizure by rebels of an ore body or mine in a country other than that of the owner of the ore body or mine.

The most common forms of political risk that have affected mining ventures include:

- Expropriation

- Currency restrictions

- Political violence

These days the following may be added to this list of classic political risks:

- Transnational crime and corruption, such as occurs when drug growers and dealers would rather not have a mine near their farms, or seek to expand their investments into legal activities like mining.

- Local versus national politics, such as occurs when local groups seek independence from the national government; Quebec is a good example.

- Non-governmental threats, such as those posed by political parties seeking to win the next elections, religious groups seeking to divert attention from their other failings, NGOs, labor unions, seeking to expand their base of influence, and rich people who simply want to maintain an unspoilt environment near their hunting lodge.

Patrick Garver of Barrick talking at the Rocky Mountain Mineral Law Institute in 2007 noted these approaches to assessing political risk:

Consider the principle attributes a foreign investor would like to be present to minimize political risk, including legal, political, and fiscal stability; clear investment policies; a predictable mining code; transparent dispute resolution; majority ownership; the ability to repatriate profits; and access to foreign exchange.

Look backwards at the history of the host country with respect to foreign investment, and look forward by considering the life, longevity, and policies of the present government.

Look at the courts, the cops, and the constitution and whether the state is failed or is failing or is likely to fail.

Look at the currency – is it stable or subject to chronic inflation; Zimbabwe is the most notorious example.

Consult the experts; read the papers; call people in the country; get out and travel the county; exercise due diligence.

Mining companies can and do take out political risk insurance in order to protect themselves from political risk. Look into the company structure to see it you will benefit if the company is paid out on their insurance policy, or if you will simply be left with worthless shares. Generally, if you invest in a mining company with many mines and one is lost to political risk and they get paid out you will be OK. But if you invest in a small company with only one mine in a country that is lost to political instability, both you and that mining company will probably loose, even if in the end the political risk insurance policy pays out. .

Now we are in a position to consider the political risks in Quebec and Peru. Simplistically Quebec could break away from Canada and you would have to do all your mine planning in French. In Peru, well they have had some pretty dramatic changes in government, and I suspect (after but one visit to Lima) that this could occur again.

But do not take my world for it in deciding to invest. Rather look at the opinion on mining professionals. I recommend the annual report put out by the Fraser Institute. I see they rank Quebec as number one in Policy Potential Index—this is a sort of measure of the political risk you run, although a lot more is included. Peru ranks about 27 just between New South Wales and Victoria, both in Australia. Not a bad bet seems to me. At this link is something I once posted on their assessment of British Columbia. Another place you may consider as a mining investment possibility.

Keep in mind I make no buy or sell recommendations regarding Rocmec. I simply urge you to consider their political risk and to consider the political risk involved in any investment decision involving far away places. Good investing.