Hey Guys/Girls:
Sidetrack a bit here......what I wanted to write of is something that people keep on asking me time and time again.
Questions like
'Where do you get your info?'
'Why do you know so much about this company?'
'How do you know how to calculate the share value?'
'Where do we start if we know nothing about mining or investing?'
etc etc etc....you get the picture :)
I will give you some books that I think are good guidelines....but before that, let me just assert my point that Knowledge is Power.
I have seen many people get burnt in share trading/investing(probably i should call gambling hehe) in the past....and when you ask them, why they bought a certain share...their answer will be 'Because I heard rumours that.....' or 'My uncle/friend/brother told me that it is a good buy' etc. When you ask them whether they know who is the CEO, what is the history of the company etc, they don't even have a clue.
My point is - even SOPHISTICATED investors lose money sometimes in the market, so what hope do you have when you don't know anything about the company you are putting your money in?!
The more you know, the more confident you get and the less you are affected by daily ups and downs of the share market (unless you are a day trader, which i am not)
Basic questions you should know about companies are:
1. What does the company mine? (i know, it is a very simple question, but ask some people that have tens of thousands in the market, and they might not know!)
2. What country does the company mine in? What kind of political history does that country have, for example ghana, papua new guinea, canada etc? Is the government stable?
3. What is the demand of the commodity that they are mining?
4. Which stage of mining are they in? Are they just exploring? Or they have already started to prove reserves? Are they at the BFS (Bankable Feasibility Study) yet? Have they start to produce the minerals yet? This will determine which stage the company is in and to allow us to compare with other companies in the same stage.
5. Who else is mining in the same area? What is their market capitalisation as compared to the company that you want to invest in?
6. Who is the management? Do they have proven experience?
7. What is the history of the company? When did it start and what did they acheive so far?
8. Is the area that they mine fertile? Have there been any proven reserves surrounding that area?
Most of these questions you will be able to get the answer by simple googling it, or going to wikipedia or the company website, or asx announcements....there is plenty of info online.....just whether we want to find it :)
This will give you a good indication of what industry and background this company is operating in.
Few books that I am reading is
http://www.amazon.com/Junior-Mining-Investor-Profitably-Exploration/dp/0979533503/ref=sr_1_1?ie=UTF8&s=books&qid=1298455225&sr=8-1
http://www.amazon.com/Investing-Resources-Profit-Outsized-Potential/dp/0470613262/ref=pd_sim_b_8
http://www.amazon.com/Mining-Valuation-Handbook-Investors-Management/dp/0731409833/ref=pd_bxgy_b_img_b
So far, the books are proving to be a gem in helping me to understand the industry better, as i am not a geologist or miner etc......
Have a good day!
Hi Irene, I saw your blog and thought you might appreciate a book that I have just completed writing called 'Global Mining Investing'. I have been investing in junior mining stocks for over 30 years (since I was 11yo in fact), studied geology, mining, mineral processing, finance, accounting, economics, and worked in the industry, for a consultancy, and in boutique mining finance. I thought it might be of interest to you and your readers. Its a 2-volume eBook set, about 450 pages. In it I think in it I have covered everything a person needs to know. See www.miningstocks.sheldonthinks.com.
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