To provide you with an overview of what we think are the best mining stocks, we have been screening several hundred stocks over the years.
We will not tell you which companies to buy, but we will try to give you an information base, which you can use to quickly screen a rather confusing market. Our goal it to try and help you, the investor, figure out which companies have high investment potential and which are more likely to fail?
1. Our focus is on mining and exploration companies, which report considerable resources. There are e.g. companies, which report resources of 300,000,000 ounces of silver - and the market capitalization is 10,000,000 Dollars. That means 1 ounce is currently valued at 0.03 Dollars. We expect, better hope that gold and silver in the ground will one day have a valuation close to the physical bullion that has already been mined. Is this that simple? Answer: No! Don't be fooled by numbers. We, the investors are not really in the position to ascertain the accuracy of any published resource figures. We do not say that published geological figures are per se wrong. We just want to remind you to be skeptical and question the figures.
2. How many financial and other analysts are mentioning a specific mining stock. There are lots of "experts" out there who want to make you believe that glossy brochures and reports are trustworthy and reliable. There is one big warning here: Do not trust any marketing spin! And be very careful with analyst recommendations. Do not just jump on a stock just because one or several analysts have recommended the company as a good investment. Some of the companies that were highly recommended just a while ago do not exist any more or the stock price has gone done so much that any investor would have lost more than 99% of his/her investment. The more analyst comments your read the more familiar you will get after a will individual market commentators and analysts. In our report we collect these analyst statements in order to get an idea of what the general sentiment about a certain company is. This is just one of many indicators. But usually a good one.
3. One simple test is whether the company has any cash. If it doesn't, the company is forced to raise cash in the market to survive. Many companies with no cash and mediocre projects effectively have no value.
Is the company making a profit or a loss? If it has been producing losses, for how many years? There are a couple of characteristics that may give us a clue. Good dividend payers with secure cash flow will probably rise first.
A number of companies have a few hundred thousand dollars in the bank and are conserving cash-paying rent and salaries and not doing much else. But if that's all they're doing, they're going to burn through that money. If a company is going to add shareholder value, it needs to do something on the ground, physical work that will build value. It's hard to imagine a meaningful exploration program unless it has more than $1 million in the bank.
Most figures issued by exploration companies are very difficult to verify. You have to look at the actual figures, i.e. the figures that are reported in balance sheets. So only historical figures, production figures, are real data.
And exploration companies do not really produce anything else than "exploration results", which are not worth much apart from having a positive or negative effect on the share price. We actually do not expect that all exploration and junior mining companies will survive. Many exploration companies are not able to evolve into proper mining companies and do not plan to do so. Many exploration companies probably hope to be taken over by another major and profitable player in the market. Mining is a highly capital intensive business. But if you think gold is going higher, buy gold. If you are going to buy gold stocks, buy them because there is some internal reason to own that company and why it is becoming more valuable. Never confuse the two.
It's important to note that most of the juniors are nonviable at any gold price. Many of these junior companies issue many millions of shares at a nickel to raise $300-400K, which is basically going to pay insiders' salaries. These people are basically putting the money from one pocket into another pocket, and issuing themselves 10 or 11 million shares in the process. This is very important to remember. Any exploration company or junior miner will need very heavy, external investment for a long time, before they are able to pull the metals out of the ground. Exploration work is extremely expensive. Do you have any idea how much a single bore hole costs?
And any serious exploration may need hundreds of drills just for one area to be investigated. Just imagine the cost. To employ for example qualified trades people in Australia, Canada or the US will cost from A/CAN/US$100,000 to A/CAN/US$250,000 per head per year. There is actually a shortage of highly qualified and experienced engineers and technicians. All these issues will rarely be mentioned by the industry itself.
4. Another aspect is the actual market performance of these companies. How volatile has the share price been? What is the actual market capitalization? Has the company been able to survive difficult market conditions? Does the market trust a particular exploration or mining company over time?
5. What is the quality of the company's management? Also look at mining shares with management teams that have proven themselves. There were a number of disasters over the past few years caused by companies focusing on growth rather than cash flow. They overpaid for investments and diluted their shareholders. Many of those executives have left. Management is key in the junior sector-get to know them. Of the roughly 3,000 junior exploration companies combing earth chasing down anomalies, maybe half can be thrown out because of incompetent or unfocused management.
6. What is the political risk where the company operates? Africa is not an easy place to do business: problems with security, bureaucracy, and infrastructure plague many nations on this continent.
7. One approach is to look at companies that have a real asset and are advancing it toward production. They'll either take it into production or will be taken over by a company that will. Maybe you won't get 10, 20 or 30 times returns, but there is a much higher probability of achieving a double, a triple or even a tenfold return than if you bet on an exploration discovery only.
Outlook:
What do we expect will happen in the near future? Everything is pretty much on sale. The question is when will the mining shares go up, which ones will go up first? Junior mining companies carry more risk than senior mining companies because they explore for new mine deposits. At the same time, their shares are priced more attractively and offer significantly more upside. Investors can profit by selecting those juniors that appear most likely to discover and exploit first-rate reserves in the ground. If you want to grow your wealth, you have to focus on investments. You might want to look at mining/exploration companies because there are some very good opportunities available because of today's low prices. We have never seen anything like this in the over 30 years.
The valuations are irrational. Companies are trading at discounts to cash, some at one-third of the value of cash in the bank. There are companies with multimillion ounces of gold deposits trading at just slightly over the value of cash in the bank and, in some cases, even less than the value of cash in the bank. The price for physical gold and silver will eventually rise again. The reasons for this are obvious to anybody who has been observing the precious metals issue for some time. When the price for physical gold and silver rises, the stocks of the best exploration and junior mining companies should perform many times better than physical bullion. So take the time; do the due diligence. Find the companies that are trading at very low prices relative to the asset values and load up on them.
We just mentioned some of the questions to ask. Do these criteria eliminate the investment risk? No! But answering these questions may reduce the risk considerably.
The profit potential is enormous for anybody who has cash and is coming into the market now.
http://www.lunaexpress.de
We will not tell you which companies to buy, but we will try to give you an information base, which you can use to quickly screen a rather confusing market. Our goal it to try and help you, the investor, figure out which companies have high investment potential and which are more likely to fail?
1. Our focus is on mining and exploration companies, which report considerable resources. There are e.g. companies, which report resources of 300,000,000 ounces of silver - and the market capitalization is 10,000,000 Dollars. That means 1 ounce is currently valued at 0.03 Dollars. We expect, better hope that gold and silver in the ground will one day have a valuation close to the physical bullion that has already been mined. Is this that simple? Answer: No! Don't be fooled by numbers. We, the investors are not really in the position to ascertain the accuracy of any published resource figures. We do not say that published geological figures are per se wrong. We just want to remind you to be skeptical and question the figures.
2. How many financial and other analysts are mentioning a specific mining stock. There are lots of "experts" out there who want to make you believe that glossy brochures and reports are trustworthy and reliable. There is one big warning here: Do not trust any marketing spin! And be very careful with analyst recommendations. Do not just jump on a stock just because one or several analysts have recommended the company as a good investment. Some of the companies that were highly recommended just a while ago do not exist any more or the stock price has gone done so much that any investor would have lost more than 99% of his/her investment. The more analyst comments your read the more familiar you will get after a will individual market commentators and analysts. In our report we collect these analyst statements in order to get an idea of what the general sentiment about a certain company is. This is just one of many indicators. But usually a good one.
3. One simple test is whether the company has any cash. If it doesn't, the company is forced to raise cash in the market to survive. Many companies with no cash and mediocre projects effectively have no value.
Is the company making a profit or a loss? If it has been producing losses, for how many years? There are a couple of characteristics that may give us a clue. Good dividend payers with secure cash flow will probably rise first.
A number of companies have a few hundred thousand dollars in the bank and are conserving cash-paying rent and salaries and not doing much else. But if that's all they're doing, they're going to burn through that money. If a company is going to add shareholder value, it needs to do something on the ground, physical work that will build value. It's hard to imagine a meaningful exploration program unless it has more than $1 million in the bank.
Most figures issued by exploration companies are very difficult to verify. You have to look at the actual figures, i.e. the figures that are reported in balance sheets. So only historical figures, production figures, are real data.
And exploration companies do not really produce anything else than "exploration results", which are not worth much apart from having a positive or negative effect on the share price. We actually do not expect that all exploration and junior mining companies will survive. Many exploration companies are not able to evolve into proper mining companies and do not plan to do so. Many exploration companies probably hope to be taken over by another major and profitable player in the market. Mining is a highly capital intensive business. But if you think gold is going higher, buy gold. If you are going to buy gold stocks, buy them because there is some internal reason to own that company and why it is becoming more valuable. Never confuse the two.
It's important to note that most of the juniors are nonviable at any gold price. Many of these junior companies issue many millions of shares at a nickel to raise $300-400K, which is basically going to pay insiders' salaries. These people are basically putting the money from one pocket into another pocket, and issuing themselves 10 or 11 million shares in the process. This is very important to remember. Any exploration company or junior miner will need very heavy, external investment for a long time, before they are able to pull the metals out of the ground. Exploration work is extremely expensive. Do you have any idea how much a single bore hole costs?
And any serious exploration may need hundreds of drills just for one area to be investigated. Just imagine the cost. To employ for example qualified trades people in Australia, Canada or the US will cost from A/CAN/US$100,000 to A/CAN/US$250,000 per head per year. There is actually a shortage of highly qualified and experienced engineers and technicians. All these issues will rarely be mentioned by the industry itself.
4. Another aspect is the actual market performance of these companies. How volatile has the share price been? What is the actual market capitalization? Has the company been able to survive difficult market conditions? Does the market trust a particular exploration or mining company over time?
5. What is the quality of the company's management? Also look at mining shares with management teams that have proven themselves. There were a number of disasters over the past few years caused by companies focusing on growth rather than cash flow. They overpaid for investments and diluted their shareholders. Many of those executives have left. Management is key in the junior sector-get to know them. Of the roughly 3,000 junior exploration companies combing earth chasing down anomalies, maybe half can be thrown out because of incompetent or unfocused management.
6. What is the political risk where the company operates? Africa is not an easy place to do business: problems with security, bureaucracy, and infrastructure plague many nations on this continent.
7. One approach is to look at companies that have a real asset and are advancing it toward production. They'll either take it into production or will be taken over by a company that will. Maybe you won't get 10, 20 or 30 times returns, but there is a much higher probability of achieving a double, a triple or even a tenfold return than if you bet on an exploration discovery only.
Outlook:
What do we expect will happen in the near future? Everything is pretty much on sale. The question is when will the mining shares go up, which ones will go up first? Junior mining companies carry more risk than senior mining companies because they explore for new mine deposits. At the same time, their shares are priced more attractively and offer significantly more upside. Investors can profit by selecting those juniors that appear most likely to discover and exploit first-rate reserves in the ground. If you want to grow your wealth, you have to focus on investments. You might want to look at mining/exploration companies because there are some very good opportunities available because of today's low prices. We have never seen anything like this in the over 30 years.
The valuations are irrational. Companies are trading at discounts to cash, some at one-third of the value of cash in the bank. There are companies with multimillion ounces of gold deposits trading at just slightly over the value of cash in the bank and, in some cases, even less than the value of cash in the bank. The price for physical gold and silver will eventually rise again. The reasons for this are obvious to anybody who has been observing the precious metals issue for some time. When the price for physical gold and silver rises, the stocks of the best exploration and junior mining companies should perform many times better than physical bullion. So take the time; do the due diligence. Find the companies that are trading at very low prices relative to the asset values and load up on them.
We just mentioned some of the questions to ask. Do these criteria eliminate the investment risk? No! But answering these questions may reduce the risk considerably.
The profit potential is enormous for anybody who has cash and is coming into the market now.
http://www.lunaexpress.de
You need to be invested in exploration and junior mining stocks before everybody gets on the bandwagon. You have to get in whilst these stocks are "penny stocks".
Visit http://www.lunaexpress.de
Article Source: https://EzineArticles.com/expert/Meinolf_Klemens/1598216Visit http://www.lunaexpress.de
Article Source: http://EzineArticles.com/7749465
No comments:
Post a Comment