When it comes to the rule of law, North America, Western Europe and Japan – metaphorically speaking – are isolated islands surround by a vast landmass of lawlessness.

Looking further afield, the rule of law in developing countries endowed with mineral wealth is not so well developed.

Using an example from Latin America, a junior exploration company with a project in Chile can expect fair treatment from the government and freedom from arbitrary seizure or nationalization of its project. Chile also happens to be an advanced economy, a member of the Organization for Economic Cooperation and Development (OECD).

By contrast, a project in Bolivia, (rank 106 out of 177 on Transparency International’s 2013 Corruption Perception Index), has a high chance of being nationalized at some point during its life cycle. (Bolivia also happens to be the poorest country in South America.)

Using the same analogy, but adapt it to Asia, highly industrialized South Korea would be the opposite pole of poor but resource-rich Indonesia (rank 114 out of 177 on Transparency International’s 2013 Corruption Perceptions Index).

Quite a few companies – Churchill Mining and Intrepid Mines, for example – have made a huge discovery there only to find themselves subsequently elbowed out of their rightful ownership by the scheming local elites.

Western notions of fair treatment and transparency mean nothing in places where the local elites play be completely different rules and where might makes right is often the predominant mindset.

Flawed assumptions about the behaviours and mindsets of local officials and partners by Canadian miners have from time to time cost them their projects.

The good news is a people’s ideas and beliefs about certain things are organic and they do change over time.

In the long run – perhaps measuring in decades – the people in less developed countries will embrace certain universal set of values that we in the West take for granted – respect for the rule of law, fair play, gender equality, transparency, and good governance.


But in the short term, the harsh realities remain.

The reality is that people in less developed countries have different values, mindsets and approach to business.

The reality is that most promising discoveries and large mineral deposits are in remote areas where distrust of outsiders remain high.

The reality is that success in advancing a project overseas require overcoming linguistic and cultural barriers.

The reality is that most people in developing countries still adhere to the mistaken notion that the resource in the ground belongs to their people and their country. It’s difficult for them to reconcile to the fact that legally the resource delineated may just belong to the foreign company that spends the high-risk exploration money.

The reality is that the rule of law is weak in most foreign jurisdictions and without a strong local partner, a Canadian junior is vulnerable to losing its project through onerous regulatory hurdles, community opposition or outright nationalization.

Time and again, community opposition to a project can be traced to the fact that at some point in time, some kind of social, cultural or political blunder was inadvertently made by the foreign company.


In the meantime, Canadian juniors venturing far from home just have to learn to live with these realities and adapt to the best of their abilities.

What then is one thing that can help increase the odds of success in a foreign country?

Success overseas requires local knowledge and a sensitivity to cultural issues.  Most junior exploration companies are strong in technical knowledge, but are often handicapped by a lack of understanding of the power structure and mindsets of the people they are dealing with.

When in Rome, do as the Romans do. Take this analogy one step further, when in Rome, it pays to have lots of Roman friends.

 In any town or region, there are always powerful people or families lurking in the background. Who they are and what they care about may not be obvious to outsiders, but they exist nonetheless. Getting these elites on board earlier could make a difference between safeguarding a promising project or losing it later to circumstances beyond one’s control.