Editor's Note: Jon D. Markman writes a weekly column for CNBC on MSN Money that is republished here on TheStreet.com.
Bummed by all the gray-haired killjoys telling you that all the fun is gone from investing, that small-caps are dead, emerging markets are over, commodities are a bust and cash is king? Then step right up to Jon's little House of Crazy Joy, because have I got a thrill-ride stock for you. It's an idea for these stressed-out times so ridiculous that no one in their right mind would consider it. So, you know, it just might work. Don't call your financial adviser, in other words. She'll never go for it. Instead, put down your granny glasses, twirl a globe to equatorial Africa and put your finger smack in the middle on the fat patch of country the size of Western Europe. It's probably labeled Zaire, but after decades of civil war, dictatorship, corruption and name-changing, this minerals-blessed nation with fewer than 400 miles of paved roads prefers to be known as the Democratic Republic of the Congo. Hey, you know: tomato, to-mah-to. If a U.N.-sponsored election in three weeks works out as expected, you could call this place the Democratic Republic of Buried Treasure, because political stability will lead world credit-rating agencies to upgrade its sovereign rating -- an important step toward unlocking its incredible resources. For hidden beneath the DRC's dense mountain jungles are tens of billions of dollars worth of unexploited gold, diamonds, uranium, cobalt, tin and tungsten that have escaped major miners' grasp because the countryside has been far too dangerous to deploy modern equipment and workers. The smart and sane way to play a new era of peace and prosperity in the DRC would be the shares of large international diggers such as BHP Billiton ( BHP). But if you want to get all Jack Sparrow about it, then you'll want to know that the really big commercial winners will be a handful of small Canadian public companies with untapped claims that rank among the richest in the world.
High Risk, High RewardBefore your eyes get too big, keep in mind that there are many significant physical and psychological hurdles for the country, once known as the Belgian Congo, to leap. Four million people have died from war, disease and famine in the past decade, and the election -- which is costing the U.N. around $400 million as part of an effort to stabilize all of central Africa -- may fail. The interim government, led by soft-spoken Joseph Kabilia, has won surprising kudos from Western civil rights organizations and is ahead in the running to form the country's first freely elected leadership. But it has also imprisoned journalists to muffle dissent, so its acceptance on the world stage is not a done deal. Still, almost anything would be better than the outrageous thievery of brutal dictator Mobutu Sese Seko, who was ousted in 1997, or the vicious ethnic strife that followed. And also note that several other small Canadian developmental miners with significant stakes in the Congo, including Moto Goldmines and First Quantum Minerals, may do better than Banro. So might larger, and thus more diversified, miners with claims in the area, such as South Africa-based AngloGold Ashanti ( AU) and Gold Fields ( GFI), or BHP Billiton, the Aussie. Of the so-called "junior golds" in the DRC, Banro appears to be special in the quality of its executives, its remarkable focus on providing jobs and scientific development opportunity for native Congolese, and the potential for its properties. After so many stormy years of death and frustration, a Raymond James analyst calls Banro "the gold at the end of the rainbow."
|Companies with major mining claims in the DRC|
|Precious Metals||7/11 Close||Mkt. Cap.||Home|
|Moto Goldmines||$4.95||$276 M||Canada|
|BHP Billiton||$43.07||$77 B||Australia|
|AngloGold Ashanti||$48.25||$12 B||South Africa|
|Gold Fields||$23.58||$11.6 B||South Africa|
|Adastra Minerals||$3.54||$288 M||Canada|
|Anvil Mining||$7.35||$388 M||Canada|
|African Copper||$1.40||$72 MM||Canada|
|Phelps Dodge||$80.37||$16.3 B||USA|
|Equinox Minerals||$1.29||$204 M||Canada|
|First Quantum Min||$52.50||$3.2 B||Canada|
|Tenke Mining||$12.11||$708 M||Canada|
|BRC Diamond||$4.25||$52 M||Canada|
|Source: RBC Capital Markets|