A continuous focus and monitoring of Country Risk is very important to all financial market participants.

An April 3, 2012 article, Never Underestimate Country Risk (Marin Katusa, Casey Research), begins by reiterating that risk assessment of companies in the resources sectors as "some of the most unpredictable out there". The piece then focuses on 'Country Risk', as one category of risk under which a number of 'Company Specific Risks' fall. The article states:

"For the investor, the best way to approach country risk is with a truckload of knowledge, a boatload of patience, and a management team with proven risk management skills. If you have decided the potential reward is worth the risk, go for it. But prepare an exit strategy too, because when it comes to country risk situations change very quickly and problems can drag on for decades."

The article goes on to discuss 'country risk' as it has specifically impacted select oil and gas companies in Nigeria, Ecuador and Brazil. Near the end, the author says:

"For investors, the most important message is: never downplay country risk. Even stable, resource-friendly, First-World countries have made abrupt changes to resource laws that threw companies under the bus."

The article ends by saying (my words) that:

• each country has its own specific 'country risk' related elements;
• every company has its own 'country risk'-management methodologies; and,
• investors need to understand their own individual risk tolerances to participate in the resource sectors in the context of 'Country Risk'.

While the article focuses on energy companies, it is equally applicable to mining exploration, development and producing companies. Further, had the author wanted to write a book on the subject instead of an article, he could have expanded what he wrote to deal with specific 'Country Risk' events that have transpired in Argentina, Peru, Mali (ongoing as this is written) and elsewhere over the course of the past 12 months.

As I have said frequently in these Commentaries, Country Risk currently is a 'big deal', and is going to become an increasingly 'Bigger Deal' going forward.

No investor, speculator or trader should participate in the Resource Sectors without clearly focusing on 'Country Risk Issues and Prospects'. The referenced article is well worth reading.