RLKX.OB - Due Diligence That Pays off
In the investing world, a phrase we often hear is “due diligence”, and rightfully so. If one doesn’t do their “DD”, there’s a good chance that the investment might go sour. So, just what is Due Diligence? A glance at the dictionary shows us this: “the care that a prudent person might be expected to exercise in the examination and evaluation of risks affecting a business transaction”. Okay, that’s a good baseline. We can further expand our definition based on a Wikipedia entry: “A common example of due diligence in various industries is, the process through which a potential acquirer evaluates a target company or its assets for acquisition”. Keep that thought, we’ll be back to it in a moment.
One can also assign “due diligence” to the amount of investigation one conducts on an item of interest. If, for instance, you were to buy a used car, you’d certainly want to spend a certain amount of time doing your “due diligence” to make sure that the vehicle was sound, had no major defects, and wasn’t reported as being stolen, etc. So the term “Due Diligence” can really be broken down to mean “putting in the correct amount of research so you benefit from what you’ve found.” With that in mind, we’d like to examine the due diligence that Red Lake Exploration has done concerning their latest properties in Chile.
The Company trades under the ticker RLKX. It was the due diligence of Red Lake’s president, John Di Cicco, that swayed him towards securing the Camila Breccia, the company’s copper-gold project in the Candelaria iron-oxide-copper-gold (IOCG) belt of Chile’s coastal cordillera. In fact, the reason that the company has commenced exploratory drilling on this very property is because Di Cicco’s due diligence, in researching over 12 promising properties, resulted in the selection of this particular property as a top candidate for success. Di Cicco found that previous testing and exploration, performed by Trilogy Metals Inc, in the late 90’s, had indicated viable returns. In fact, the previous work included a property-wide geological mapping and sampling program, as well as a geophysics-induced polarization survey.
But the real “find” was that two previously identified mineralized structures had produced coincident-induced polarization anomalies. In the field of exploring for gold/silver/copper, IP anomalies are certainly “highly significant” in pinpointing possible locations of good ores, and, sure enough, grab sampling has already found the area promising in its copper content.
Doing the proper Due Diligence, or actually researching work that has already been done, and then using those results to narrow the possibilities down to the greatest probability of success, is what separates the mundane management team from the aggressive and highly successful management team. When researching a company for investing purposes, it’s always good to do your “DD”. When you find a management team that successfully executes its own due diligence, they are usually worthy of more than a cursory glance. Keep an eye on this one.
