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Assessing a junior explorer

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Assessing a junior explorer

How do one assess exploration (junior) mining companies (if there is such a thing as a simple summary of what to look for)? Example of recent rpt: AZY drill rpt showed significant gold deposit and to a certain extent, ESS too. Share price needle hardly moved. On similar holding on CHN, held it for a number of years, unfortunately sold out just before price took off from btw 20c to $1.00 to $7 plus now. Not even a mining company! Compared to GOR that has a similar path but producing real gold now and trading at about $1.30 Any "easy" way to assess such companies much appreciated. Keep up the great work, James and team Michael C.

Answer

Hi Michael,

The junior mining space is unfortunately a proverbial minefield of high risk v reward for investors especially if you aren’t very close to the respective companies. The first thing when looking at any stock is determining what the market cares about. Is it the size of resource, the ease of extraction, the proximity to a major, the management team etc then focus heavily on that and get to know the company as well as you can. There is no one size fits all approach here unfortunately.

Personally I would be applying a fair degree of technical analysis to such positions because so often other people know more, but the price will ultimately tell the truth  i.e. it’s the aggregation of the markets view on the stock and the market is ‘never wrong’.   Remember to always quantify your risk especially if you are unable to get a good handle of the companies financial position and be prepared to be wrong.

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Chalice Mining (CHN)
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