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TEN SECRETS OF INVESTING IN JUNIOR MINERS

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Good discussion about trading Juniors

in this interview with David Morgan : http://www.kereport.com/audio/0113-04.mp3

 

Be careful, they are "burning matches", and many will go to zero, he says.

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Guest CD

Great discussion here. Personally, I stay away from rank explorers. Lots of talk hear about selling half when they double (as if that's a given). Not much talk about the duds. So why take the risk?

 

I prefer to take the far safer approach and buy after the discovery hype subsides and "reality" sets in. I like to get in about 6-9 months ahead of production depending on market conditions. Buying the summer lull is usually my favorite time if it is at all possible. Share prices are almost guaranteed to rise if you pick a decent entry point and the underlying commodity isn't tanking. And you can rationally value companies using NAV, or my favorite for juniors, cash flows. I can't think of a single junior I've invested in that is about to enter production that hasn't seen a healthy share price increase as they get closer to production. Often times there are delays getting into production and that is annoying, but it happens all too often not to plan on delays.

 

A play I am particularly high on is Tamerlane Ventures (TAM.V). Control the old Pine Point zinc-lead mine that Cominco made a fortune on and are about to start a "bulk test" of 1MM tonnes (that's a huge bulk test in most instances, but compared to their total resource, it isn't). Trading at an absurdly low valuation as the market is assuming they will fail to get into production, which is a big mistake imo. They control ~71MM tonnes (worth ~US$15B at current prices) of drill delineated ore, yet only carry a $15MM mc with $4MM in the bank and a Feasibility due out in the next month or so. This is a plug, but it's well worth doing serious DD. I defy anyone to name any junior that controls such a huge resource for such minuscule valuation and will get into production.

 

Another beaut is Roca Mining. (ROK.V). Will start production in Mar/April. Trading about 1.5x fwd cf and about a 2 PE. Sprott is hot on the company and has taken down the last three PPs, several without any warrants attached, which is as rare as hens teeth.

 

cheers

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"Lots of talk hear about selling half when they double (as if that's a given).

Not much talk about the duds. So why take the risk? "

= = = = = = = =

 

Believe it or not, in the current Bull Market, i have had very few dubs-

probably less than 1-in-10. Call me lucky, but that's how it has been these past 2-3 years.

 

My biggest dud in 2005 was New Sleeper (NWS.v), which has been renamed Reunion Gold.

 

Here is the chart for Reunion (v.RGD): ... update

big4lw.gif

 

I bought at $1.00 in a placement in 200x, and saw it sink to a very sad sub-20 cents in mid-2005.

How'd I play it?

 

I took a loss at near 30 cents (for which i got a tax loss), stayed out of stock for over a month,

checked the story carefully, and bought again under 25 cents. It subsequently rose to over $1.00,

and i sold most of my position around $1.00.

 

It has subsequently risen to over $2.00, and i still have the original warrants which carry a $2.00

strike, and an expiry in 2010.

 

Why did i reinvest after taking my big loss?

 

I trusted management, and thought the original loss was due to a dud project, and that proved

correct. Management turned the company around by offloading the first project, and getting a new one.

Hence the name change.

 

I wish they were all like that. But New Sleeper was once my biggest loss, so it was great to make

a recovery, after taking the tax loss.

 

Two or three of my smaller investments have gone totally bust. Most notable was UK-quoted Navan

Mining. I invested without meeting management, and learned a big lesson from that.

 

Worst investment in 2006 was probably Columbia Metals (v.COL) for which I am still hopeful.

 

= =

 

I am long Roca Mines (v.ROK) from the 20 cent placement, but have only about 15% of my original

position, having taken my initial capital back several times. i like getting in before the quality

institutional investors, like Sprout.

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chart, GEX.L ... update

 

 

it has come up a long way since it relisted.

 

what are those odd spikes in volume caused by?

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Hi All,

 

I have read a lot of your posts on Junior Miners - very useful information regarding investing in mining and exploration companies.

 

For a UK based investor (interested in precious metals/minerals, particularly Gold, Silver and Uranium), I would be grateful if you could you let me know:

  • What would be the best way of trading in Junior Gold Miners (in e.g. Canada, Australia, S. Africa)?
  • Of any experienced fund managers who manage a portfolio of Junior Gold or Silver miners?

Many Thanks.

 

Best Regards,

Tom

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hi tom,

 

welcome to the website.

 

here's my set-up:

 

+ I have an account in the uk, which i use infrequently,

 

+ i have funds abroad with more than two brokers. my most active account is with a canadian broker based

in Vancouver (canaccord), and it is almost entirely invested in resource companies,

 

+ i rarely do trades under C$5-6,000 because the brokers minimum trade makes those inefficient. My commissions are not cheap, but i get great service, and occasional good ideas- which in my mind, covers the higher commission cost.

 

+ over half of my investments started as private placements, and i typically invest a minimum of c$25,000 in a pp.

the most recent ones i did included: el nino (ELN.V at $0.40), capital gold (CGLD at US$0.30), and alto ventures (ATV.v at $0.10)

 

+ in order to participate in a canadian pp, you need to be an "accredited investor" meeting certain networth or income tests. I typically hear about pp's from the company directly, through certain IR professionals that I know, or through friends (it helps to have a "network", and getting involved on GEI is a good way to start building one.)

 

+ i also buy stocks in the secondary market, and have recently been buying: golden china (GCX below $1.10), Vangold (VAN.v in the low $0.40's), Tumi (TM.v) below $0.55, and some freetrading ELN.

 

+ a few weeks ago, i was buying "tax bargain" (see that thread), and teh best performers so far have been GNG.v, WGP.v, and a tiddler TPBV.

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Hi Tom

 

I agree with the Doc regarding getting a good broker.

 

Re Commissions, i used to use an online broker with very cheap rates. My broker has about 6 times the rate, but i find that he is able to time my entries better (since he is watching the screen) and often the savings there more than offset the higher brokerage rate.

 

And if you are going to play junior miners...you need a broker that:

 

- has main focus on that sector, and has been for a while (5+ years at least imo)

- does not recommend house stocks (unless they actually are good)

- is versatile and can look at other sectors (for example, jnr sector in Australia is full of cr@p at the moment and is stagnating, with some junior goldies going to the wall...so need to be able to think outside just the mining sector)

 

I would strongly recommend my broker but he is in Australia and only plays the Aussie sharemarket.

 

Regarding funds, I find the listed ones are the best, rather than going towardsa 'real' investment manager. Companies (on the ASX) like Heemskirk, Lion Selection Group and so forth have all done quite well. Don't invest in them myself though i did have Lion Selection for a while many years ago.

 

Regarding playing the junior market, if your a trader, then i cant comment...but if your an investor, see my detailed post above. Its all about research.

 

BuffetJr

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"I would strongly recommend my broker but he is in Australia and only plays the Aussie sharemarket"

 

Please mention your broker's firm, if you think that is appropriate.

Alternatively, will you take emails from GEI members about this?

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Hi Dr

 

I would reccomend my broker, but not the firm itself (if that makes any sense).

 

More than happy to take emails from people who are interested.

 

BuffetJr

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Good discussion with some Junior Miners on this week's GoldSeek Radio, part 2:

http://radio.goldseek.com/

 

Yorba

Starfire Minerals

Valgold Resources

Sunvic?

Haywood's Jeremy Raffle ??

 

Go straight to 17 minutes in, if you like to skip the prior stuff

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Regarding funds, I find the listed ones are the best, rather than going towardsa 'real' investment manager. Companies (on the ASX) like Heemskirk, Lion Selection Group and so forth have all done quite well. Don't invest in them myself though i did have Lion Selection for a while many years ago.

 

Regarding playing the junior market, if your a trader, then i cant comment...but if your an investor, see my detailed post above. Its all about research.

 

BuffetJr

 

 

Any suggestions for UK funds like a smaller version of Merrill Lynch Gold & General, for example?

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Any suggestions for UK funds like a smaller version of Merrill Lynch Gold & General, for example?

 

Ambrian Capital maybe.

But I suggest looking to North America

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Fascinating, but...

 

...they should do a reprint! - Amazon are asking over $100 a copy.

Makes me think perhaps e-books are a good idea!

 

Thanks for the notes on juniors Dr B, all good stuff.

 

 

 

Sigma,

 

I just purchased through Amazon @ £25, including standard delivery from USA, book just arrived within 9 days, and is in perfect condition.

 

They had other copies available.

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Sigma,

 

I just purchased through Amazon @ £25, including standard delivery from USA, book just arrived within 9 days, and is in perfect condition.

 

They had other copies available.

 

Managed to get hold of one December last year. Friedland doesn't come out of it smelling completely of roses. lol

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+ I have an account in the uk, which i use infrequently,

 

+ i have funds abroad with more than two brokers. my most active account is with a canadian broker based

in Vancouver (canaccord), and it is almost entirely invested in resource companies,

 

+ i rarely do trades under C$5-6,000 because the brokers minimum trade makes those inefficient. My commissions are not cheap, but i get great service, and occasional good ideas- which in my mind, covers the higher commission cost.

 

DrBubb would I be able to open an account with Canaccord without having to be physically present in Canada?

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Most brokers allow account opening via post as long as the Passport copy is certified.

 

Arn

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DrBubb would I be able to open an account with Canaccord without having to be physically present in Canada?

 

Yes, I believe that is possible.

 

I think they would want a minimum account size of C$10,000 or maybe C$20,000

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When one invests in PP's shares and warrents are then owned. Where can we track the warrent price in order to make a valuation of a previous PP?

 

I had a look at Stockhouse and could only find the share price being valued.

 

Arn

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When one invests in PP's shares and warrents are then owned. Where can we track the warrent price in order to make a valuation of a previous PP?

 

I had a look at Stockhouse and could only find the share price being valued.

 

Arn

 

If the warrants are not traded on an exchange (and most of them aren’t) then I guess you could use a Black-Scholes calculator to get a “theoretical” value. Of course, you can exercise and convert to shares at any time after the hold period, right?

 

Which brings up another question: Is it legal to buy/sell non-exchange-traded warrants privately? Or do you have to exercise the warrants?

 

From what I have noticed watching many of these juniors, it seems like most people just short the common when they want to lock in profits on their warrant positions.

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Hello Dr Bubb,

 

Been reading threads on here for a few weeks, finally decided to register, as this looks a great board.

 

Slightly perplexed though after I read the article on Greatland Gold in the September Mining Journal and their share price doesn't seem to match your theory at the start of the thread as it seems to have drifted down bar the odd spike since launch.

 

The company seems well funded, gives regular updates, has experienced personnel. But I guess it's some time from production, hence the share price apathy. Don't hold, but interested as a long term play and would welcome how you view them in-line with stages of production chart you post at the start of this thread. Know there is a company specific thread, but more interested in how to judge them in your theory.

 

thanks

Riggers

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Slightly perplexed though after I read the article on Greatland Gold in the September Mining Journal and their share price doesn't seem to match your theory at the start of the thread as it seems to have drifted down bar the odd spike since launch.

 

Thanks for the tip.

 

I will have a look at it.

Greatland Gold = ??? : symbol? where does it trade? link to article?

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Greatland are an AIM explorer in Tasmania. They interviewed on CWR (very well) a few months back. Can't remember ticker.

 

Greatland Gold are GGP/LSE. The September article of Mining Journal featured them. You're welcome to the tip Dr Bubb, I don't intend to invest until next year as I don't think it's going anywhere in a hurry.But genuinely intrigued as since launch the sp has gone down and seems to have missed the "hype stage".

 

Have successfully traded shares for several years, but mining is a sector i guess at, so looking to learn more from others and understand mining fundamentals more. That's what worries me with GGP, prospects, management etc looks good yet s.p performance doesn't seem to reflect them. So am i missing something or is it just at a none exciting share price stage, with the best presumsbly to come on updates?

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smilewithme - 02/Jan/2008 15:59 - 32312 / Advfn's Gold thread

 

Video: http://piedmontmining.com/video.asp�

 

Superb video as explained below. This was in connection with a Gold Play which I do not own - Piedmont Mining, but am hoping that Gold Summit can replicate their success.

 

Discovery Investing - Looking for Ten Baggers.

 

Here are some of the points

 

1. Are the assets potentially world class? Cure for TB, Major new Gold Mine etc

2. Do they own it or control it? 100% good, 51% etc

3. Management and Board of Directors - How Good? Track record? Are they concerned for Shareholder? Personal Stake?

6. What's the catalyst? If it has a chance for discovery.

7. Buy when CHEAP (normally no one likes them at the time)

9. Buy enough Stock to make a difference.

10. Not a trading strategy - Go To Sleep stratgy when you have your position - Let it mature and not sell. Have patience, courage and be willing to lose.

 

------------------------------

 

From over the pond post:

 

Dr. Barry has led a group and his subscribers which has moved Gold Summit (TSX-V: GSM) look-alike Piedmont Mining (OTC: PIED) from .10 to about .30 and�we hope it will�climb from here. Both GSM and PIED focus on Nevada gold exploration.

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