A reality-based methodology for evaluating opportunities in the junior mining sector | August 9, 2016
In the following article, we explain our reality-based methodology for evaluating potential investments in the junior mining sector using our take on the resource revision at Orezone Gold’s (ORE.V) Bombore gold deposit as a practical example.
Fatal Flaws in the Junior Mining Sector
Our investment thesis for selecting junior mining companies involves identifying the rare quality (economic) projects available today and unmasking any potential fatal flaws (if they exist) early on, rather than chasing metal-price leverage or optionality plays managed by companies with marginal projects.
Insights into the Discovery Process
For a virtual letter titled Exploration Insights, we seem to devote an inordinate amount of text to mining, metallurgy, infrastructure, discounted cash flows, social license, permitting and, working capital.
Not today. Today we want to consider minerals exploration, a scientific process that is largely intuitive. . .
Rules of Thumb for Junior Mining Speculators and A Light at the End of the Tunnel
As we all know, for most speculators and investors the past few years in the mining and exploration sector have been disastrous. However, there are a number of fundamental trends that have been set in motion over the past few years. . .
Blind Faith-- Samples, Assays, and Estimates
. . .a resource estimate is the fundamental building block for everything that comes later in designing a mine. If the estimate is inaccurate or flat out wrong, it can require considerable re-engineering and optimizing to fix-- if it can be fixed at all.
Mining Meets the New Normal
The next 12 to 18 months could prove to be a defining time for how investors, speculators, and mining companies perceive and value both the junior and major mining sectors. The metals bull market has been ongoing for about 12 volatile years and, from the looks of the price charts. .
Profiting from the Dismal State of Gold miners and Explorers
In our November 11 Exploration Insights letter (see excerpt below) we discussed the dismal state of the junior mining sector. Today we will expand on this theme, looking at the state of the larger gold miners and the obstacles they face going forward. The objective is to lay out an investment thesis premised on mining and exploration trends that indicate we are entering a rather unique, and potentially very profitable period of time in the junior mining sector.
Approaching the Pivot Point in the Gold Cycle by Quinton Hennigh
Many investors and speculators are deservedly frustrated and dejected by the recent performance of gold and, more specifically, the gold mining sector. For many of us in this business these ups and downs are the norm, however I see the current down as a critical one. Something is going to happen. . .a month from now, six months, a year or two, we can’t know. We may continue to see more pain in junior stocks until then, but a change is coming, and investors should take heed.
Intelligent Exploration via the Prospect Generator Business Model
Minerals exploration is a scientific process of generating ideas and testing those ideas through a trial and error methodology that refines, validates, or negates those ideas. While the goal is the discovery of an economic mineral deposit that enriches shareholders, the odds of success are poor. For both junior exploration companies and speculators it is critical to shift the odds ever so slightly in your favor while keeping the costs at a minimum
The Odds and Opportunities in the Junior Miners
The discovery of an economic mineral deposit is an extremely rare occurrence that involves a very difficult, costly and determined effort. For the few people or companies that do succeed it is an extremely profitable occurrence as well.
Mining Industry Insights
Mining and minerals exploration are tough businesses to succeed at. Rocks rarely behave as you would like or expect and costs are always more than projected. Making money in this industry, either through mining or investing, therefore requires continually updating your knowledge base with new technologies and science.