Do Your Research - It Might Just Lead to an Opportunity

It is vital (yes, VITAL) to do plenty of research and to ask lots of stupid questions, and then to think about those answers.

For instance, Magnum Mining and Exploration (ASX: MGU) is about to start auger drilling for rare earths in Brazil. A couple of points to note:

1. Brazil is a hotbed for REE activity and these guys are looking for ionic clay-based REEs, not hard rock, hence the auger.

2. The auger is basically a one- or two-person post hole borer. It can go down what? 2 metres. So these guys are fairly confident about what they are doing. But IT AIN'T A LOT.

Yep, if you look at Brazil there is a whole lot of exploration in the REE sphere. But step back a little and ask questions. And the first question that comes to mind is: what are they going to do with the rare earths when they find it? Where will they get it processed.

Let's see. There's Australia's Lynas with a processing facility in Malaysia and another being built in Australia. There's a facility in India. There's a small one in Estonia. And there's Mountain Pass (right next to DTR) in California. Outside of China, that's it.

So shipping is going to be a huge expense and ANY rare earths miner in Brazil is going to struggle to make decent money.

However, most investors simply jump on what they think isa good thing, so there is money to be made in trading (not investing) these stocks as they rise. But that's not the opportunity.

The opportunity lies in one area: Keep everything peeled for Brazil to start building a processing facility. It would almost certainly become the supply point for the whole of South America. And it will almost certainly get significant government support.

So, looking for a ground-floor or early opportunity to get in on a processing facility would be a brilliant investment. And I expect that someone is doing the maths on the idea of building one. Anyone contemplating such a project would almost certainly visit Mountain Pass and possibly Lynas, perhaps even Estonia as their plant is new and represents the latest tech. Keep an eye on what the Brazilian government is saying about investment and planning in that sphere.

Suddenly, while everyone else is looking at the ground (looking at their feet), you are the only person looking up and there it is, an opportunity to grow your investment 10 times or even 100 times.

Let me know if you see anything. I'll certainly be looking and will keep you informed through here.