Jeremy Raper shared a quick pitch on Winshear Gold. It’s a Canadian junior gold miner that seems very likely to win a C$130m arbitration claim against the Tanzanian government for expropriation of its mining license. Meanwhile, the company’s market cap is just C$15m.
The crux of the thesis is that the litigation of Winshear Gold is likely to follow the path of another junior miner, Indiana Resources (IDA-AX), which has recently achieved a very similar arbitration victory against Tanzania. The court granted Indiana Resources 120% of the requested damages (US$114m vs US$95m). Both WINS and IDA have based their arguments on the same legal theory within the same geographical area. Both companies also share identical hearing arbitration (under World Bank’s division ICSID), location (Washington, DC), and legal teams. These factors strongly suggest that WINS setup is likely to yield a similarly favorable outcome.
While Winsher Gold’s shares have already surged by 43% since the announcement of IDA’s ruling, significant further potential upside remains. Assuming WINS is awarded 120% of the arbitration claim, and subsequently trades at a 60% discount to the awarded amount (akin to IDA), the shares would be priced at C$0.64/share (after netting out litigation funding expenses) vs the current price of C$0.20/share. The downside appears to be somewhat protected as even under quite pessimistic assumptions – considering 75% of the arbitration claim granted and a 70% discount to the claim value – the stock would still trade at C$0.24/share.
Note: The ‘Ideas Elsewhere’ section is intended to highlight interesting event-driven investment ideas by other authors. These ideas are not my own, and I am simply summarizing them to bring attention of SSI subscribers. I do not intend to actively follow the developments of these ideas, so you should expect limited updates or follow-ups in the comments section.