Sunday, April 18, 2010

explorers, producers, 10-baggers? mining ABC!

classification of mining companies by stage of production achievements and thus also in stage of cash-flow 
  • explorers - they have just one or few early stage projects / no cash-flow at all / huge expenses for drilling, feasibility studies, consulting, work force, investor relations, lawyers / etc. ~ these companies are my primary investment target 'cos i love that kind of stories and in case when everything turns fine they provide the highest leverage on capital invested (ten baggers!). of course, these companies are risky like hell 'cos there are so many difficulties on the road 2 prodution like financing issues, regulatory barriers (environment, country risk like congo + venezuela + russia + south africa + nigeria + ...), often are the metal grades not high enough to open a profitable mine and thats very, very, very bad for investors then :-( ... the only 'value' behind this companies is the quality of their projects + quality of their management ... the most common way of financing is private placement of new shares, therefore are these companies regularly on road-shows, conferences, investors' lunch & dinner events like 'my' endeavour silver folks recently in munich... => ALL IN ONE: it is essential to think abt the risk-reward-ratio 
  • junior producers - we have got an operating mine! lets look if it can produce gold/silver/etc profitably ...
  • mid-tier producers - my guess, above 100,000 ounces gold per year
  • major producers - my guess, above 1,000,000 ounces gold per year, the biggest gold producer is the canadian barrick with 8m ounces per year (but im 2 lazy to google & prove that now)
btw, the production numbers are often given in terms of gold/silver equivalents => a primary silver producer like scorpio mining will recalculate all its Au, Pb, Zn, Cu output in ounces of silver ...

classification by market capitalization
  • micro-caps
  • small-caps
  • ... etc.
  • blue chips
oil vs. gold? both are fine because of the supply & demand pattern, i think :-)

folks, just in case u still think abt the 'risk-reward-ratio issue' in explorer business, there is a small help out there! well, thats the canadian norm NI 43-101 which tells a lot abt the reserves / resources of a mining property / project. i will post a part from last endeavour's resource update 4 hard core fans of mining business below, but pls dont ask me abt all these different categories (proven, indicated, inferred, measured, ...) as ive no clue abt that 
...
2009 Reserve/Resource Highlights
  • Silver Proven and Probable Reserves up 113% to 16.6 million ounces (oz); Guanacevi 15.0 million oz and Guanajuato 1.6 million oz
  • Gold Proven and Probable Reserves up 87% to 44,000 oz; Guanacevi 22,500 oz and Guanajuato 21,500 oz
  • Silver Equivalent Proven and Probable Reserves up 103% to 19.4 million oz; Guanacevi 16.5 million oz and Guanajuato 2.9 million oz
  • Silver Indicated Resources up 21% to 23.6 million oz; Guanacevi 17.8 million oz, Guanajuato 4.3 million oz and Parral 1.5 million oz
  • Gold Indicated Resources up 35% to 119,100 oz; Guanacevi 37,100 oz, Guanajuato 38,200 oz and Parral 43,800 oz
  • Silver Equivalent Indicated Resources up 20% to 31.3 million oz; Guanacevi 20.2 million oz, Guanajuato 6.8 million oz and Parral 4.3 million oz
  • Silver Inferred Resources down 6% to 18.3 million oz; Guanacevi 9.6 million oz, Guanajuato 7.7 million oz and Parral 1.0 million oz
  • Gold Inferred Resources up 17% to 111,000 oz; Guanacevi 16,400 oz, Guanajuato 70,000 oz and Parral 24,600 oz
  • Silver Equivalent Inferred Resources down 4% to 25.6 million oz; Guanacevi 10.7 million oz, Guanajuato 12.3 million oz and Parral 2.6 million oz
  • ...
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folks, in case there will be some other mining-related issues/ideas later on, i will prolly update that blog, ok?



04-27-2010,  
ten baggers (also known as tenbaggers, 10-baggers, etc.) are fun :-)


folks, it is soooooo great 2 be in the right trend at the right time ... my 3rd tenbagger is here! it is novagold again, more precisely its my 2nd shot on this in that time bankruptcy endangered gold explorer. well, in some cases is bottom-fishing soooo damned profitable, u know?


go, gold bugs, go 


btw, 3 weeks ago there have been just 2 of them (for more details read my old comment) ... but there have been 3 companies (tara gold, levon, excellon) much more close to this barrier as 2day ...


 addendum, sept 20, 2011: my first 40-bagger, rio alto mining, OMG!

:-)
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