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A long bear market has quieted the junior sector, but there are still hundreds of companies telling interesting tales. To identify the best, seek out solid management.
Mining markets are at a bottom. That much is clear.
There is also general agreement that commodity prices are low and share prices have been hammered.
For anyone who believes what goes down must at some point go back up – and, given that the products of mining are literally the backbone of society, the eventual upcycle is inevitable – it means there are resource stocks with incredible upside potential available right now at low, low prices.
But you have to pick right. The bear market has quieted some of the noise but there are still hundreds of exploration companies telling interesting tales. And a sneaky logic prevails: every company that’s survived this long in the bear market must offer value and potential, right?
| The Metals Investor Forum approaches! Spend Saturday May 30th with Eric Coffin, Brien Lundin, John Kaiser, and Gwen Preston and our top pick companies. Listen to presentations, talk to management, and question the experts – all for free. Register Now! |
Perhaps – but the survivors still cover a wide range of quality. Some survived by raising very cheap money and diluting their share count. Some had to offer cheap, long-life warrants that could cap price gains. Some have no momentum, having not really done any work for several seasons. Some high-graded their mine reserves and now face rising production costs.
There are many, many ways companies either helped or hurt their long-term prospects during the bear market.
At the end of the day, figuring out which way a company went comes down to one question: management.
No matter how great a project, the people steering the ship determine whether the company will succeed or fail. Good people do not guarantee success, but they increase the odds significantly. Incompetence, arrogance, inexperience, apathy, and carelessness do guarantee failure.
This lesson doesn’t just apply to bear markets. Bad management derails companies in good markets. There are egregious examples, like Barrick spending $7.3 billion to buy Equinox Minerals in what remains a failed bid to enter into the copper market or Teck Resources spending $14 billion on coal assets at the peak of the coal market, a move that almost sank the company.
Less splashy examples can be just as damaging for shareholders, like overspending on overhead, signing weak property or debt deals that come back to bite, or letting personal affiliations or benefits bias management decisions.
Then there are all the companies that mostly rise and fall with the mining markets because management can’t manage to differentiate themselves from the pack. These teams aren’t bad; they are just not very good.
To survive in this market – and to thrive when markets are good – companies need proactive, creative, cautious, connected, hardworking, and experienced management.
Running a junior mining company in a bear market is a tough slog. Layoffs mean everyone has more on their plate. It’s a struggle to raise money on reasonable terms. It’s even harder to remain optimistic, especially when the market ignores or even punishes hard-fought good news announcements.
But there are management teams making something out of almost nothing. These are the companies that will rise first and farthest when the markets again start to move.
How to identify these groups? First, follow success. A team that has seen success once is likely to see it again. Some brokers and investors select stocks primarily by following people or groups who have paid them back handsomely before – and it’s a very legitimate strategy.
Second, listen to advise from those who know the people in question. Nothing informs an opinion about a person or team of people better than the combination of face time and knowledge of their backgrounds.
Third, finagle your own face time. The presidents and CEOs of exploration and mining companies are accessible, if you watch for opportunities, and a personal interaction can give you confidence your investment is being well managed or concern enough that you realize it’s time to sell.
If you will be in Vancouver on May 30th, there is an opportunity to take advantage of all these tactics in one swoop. The opportunity is the Metals Investor Forum, a one-day event taking place at the Pan Pacific Hotel.
Four newsletter writers will host the event: Eric Coffin of HRA Advisories, John Kaiser of Kaiser Research Online, Gwen Preston of Resource Maven and Brien Lundin of Gold Newsletter. Each writer invited his or her top-pick companies to present. Long, catered coffee and lunch breaks provide lots of time for investors and management teams to talk. It is just the kind of face time opportunity that can spark a new investment idea or solidify a current one.
The companies presenting are highly screened. To be invited a company has to have earned an active recommendation from Eric, Brien, John, or Gwen. This is a highly vetted group of companies, the kind that will outperform in the coming market run.
A limited number of seats are available to non-subscribers. If you are interested in attending the Metals Investor Forum, click HERE to reserve a seat today.
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EDITORIAL POLICY AND COPYRIGHT: Companies are selected based solely on merit; fees are not paid. This document is protected by copyright laws and may not be reproduced in any form for other than personal use without prior written consent from the publisher.
DISCLAIMER: The information in this publication is not intended to be, nor shall constitute, an offer to sell or solicit any offer to buy any security. The information presented on this website is subject to change without notice, and neither Resource Maven (Maven) nor its affiliates assume any responsibility to update this information. Maven is not registered as a securities broker-dealer or an investment adviser in any jurisdiction. Additionally, it is not intended to be a complete description of the securities, markets, or developments referred to in the material. Maven cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. Additionally, Maven in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned. Furthermore, Maven accepts no liability whatsoever for any direct or consequential loss arising from any use of our product, website, or other content. The reader bears responsibility for his/her own investment research and decisions and should seek the advice of a qualified investment advisor and investigate and fully understand any and all risks before investing. Information and statistical data contained in this website were obtained or derived from sources believed to be reliable. However, Maven does not represent that any such information, opinion or statistical data is accurate or complete and should not be relied upon as such. This publication may provide addresses of, or contain hyperlinks to, Internet websites. Maven has not reviewed the Internet website of any third party and takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for the convenience and information of this website’s users, and the content of linked third-party websites is not in any way incorporated into this website. Those who choose to access such third-party websites or follow such hyperlinks do so at their own risk. The publisher, owner, writer or their affiliates may own securities of or may have participated in the financings of some or all of the companies mentioned in this publication.
Or follow Maven: Facebook (www.facebook.com/resourcemaven)
Twitter (@miningmavengwen)
To learn how to turn resource knowledge into investment success: subscribe to Resource Maven: The Turning Point.
EDITORIAL POLICY AND COPYRIGHT: Companies are selected based solely on merit; fees are not paid. This document is protected by copyright laws and may not be reproduced in any form for other than personal use without prior written consent from the publisher.
DISCLAIMER: The information in this publication is not intended to be, nor shall constitute, an offer to sell or solicit any offer to buy any security. The information presented on this website is subject to change without notice, and neither Resource Maven (Maven) nor its affiliates assume any responsibility to update this information. Maven is not registered as a securities broker-dealer or an investment adviser in any jurisdiction. Additionally, it is not intended to be a complete description of the securities, markets, or developments referred to in the material. Maven cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. Additionally, Maven in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned. Furthermore, Maven accepts no liability whatsoever for any direct or consequential loss arising from any use of our product, website, or other content. The reader bears responsibility for his/her own investment research and decisions and should seek the advice of a qualified investment advisor and investigate and fully understand any and all risks before investing. Information and statistical data contained in this website were obtained or derived from sources believed to be reliable. However, Maven does not represent that any such information, opinion or statistical data is accurate or complete and should not be relied upon as such. This publication may provide addresses of, or contain hyperlinks to, Internet websites. Maven has not reviewed the Internet website of any third party and takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for the convenience and information of this website’s users, and the content of linked third-party websites is not in any way incorporated into this website. Those who choose to access such third-party websites or follow such hyperlinks do so at their own risk. The publisher, owner, writer or their affiliates may own securities of or may have participated in the financings of some or all of the companies mentioned in this publication.
