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Investing in the Mining Industry: Insiders view
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Viralata Offline

Posts: 75
Joined: Apr 2011
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Post: #6
RE: Investing in the Mining Industry: Insiders view

As I stated in the previous post, investing in early stage Exploration phase projects and companies carries the highest risk and also the highest rewards. If you are smart, you will try and invest in a quiver of companies that show good potential for either growth into later development phases or that have a good resource and favourable economics for getting bought out by a larger company.

Exploration and investing in the Venture Exchanges is a minefield....filled with pseudo-sheisters pumping up their projects and releasing deceptive news releases regarding their results from their exploration drilling projects. How can the average investor sort through all the information?

The fact is that they can't. Unless they are the type of person that really likes to do their homework, and it could turn into a full-time job. You will need to hold a diversified set of investments in the sector covering several different positions, from higher to lower risk. A good place to start, if you want to play around with the penny Exploration stocks in the Venture Exchanges is to pick a few in a commodity at random and watch their performance over a few months. If they are exploring in the Northern Hemisphere, particularly Canada, then pay close attention during the months following summer, when much of the geochemical and assay results become available from the summer's drilling campaign. You will likely see a nice bump in your stocks if the the exploration program achieved positive results...but be warned, the market is fickle, and too little results, however positive can be as damning as poor results. Consistency is the key. Stay away from companies that show inconsistent results from exploration, no matter how positive some of their data seems. It is possible to make money off these types of projects, but it requires a fast hand. For the average investor, this is not usually feasible.

Back to Nuts and Bolts...

Data reported by a exploration company will appear in the form of drilling results, such as 10grams/tonne Gold over 10m (an amazing result by the way). Drill results tend to be the most anticipated news release item by companies in exploration as it is these drilling results that are used to create the official 'Statement of Resource" for the JORC or 43-101 compliant report.

Here is a website that allows investors to view drilling data in 3D:
It is important to help understand the geometry of the deposit, the location and relative scale of important drilling intersections, and the overall pattern of the drilling program. Use it to better understand the way that drill data is used to sample and define an ore deposit. Once you are satisfied you understand the drilling, cross-reference the data with news releases on the companies website, and finally cross-reference the news releases with performance charts on Yahoo finance or a similar site. You will start to notice the importance of the release of news and movement in the price of the stock. Use this to your advantage. As an investor in particular company you have the right to know when and where the activities of the company will take place. Be active, ask questions! If they plan on a large summer drilling campaign in Canada, you should know how the drilling is proceeding, how quickly the lab turns around assay samples on average and use this to anticipate important news releases.

For those interested...pick a few companies from the site that you like and a even couple you don't, for whatever reason, and follow them for a few months. Watch closely how the movement in the stock coincides or doesn't coincide to events happening within and external to the company. Once you have a better feel for the rhythm of movement...get on the floor and dance.

(This post was last modified: 11-03-2011 01:20 PM by Viralata.)
11-03-2011 01:00 PM
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RE: Investing in the Mining Industry: Insiders view - Viralata - 11-03-2011 01:00 PM

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