Introduction

Whether you are Warren Buffet or an ordinary do-it-yourself investor, doing your homework is vital to managing your investments successfully.  Almost all of the experts we’ve talked to have consistently told us the same thing: investors need to do their due diligence before making investment decisions.  Given the risks associated with investing, the advice is prudent, but even more so when you consider how much marketing investors are exposed to.

Because every company has a story to tell, seasoned investors learn to separate hype from fact and ask informed questions about potential investments before taking any kind of investing plunge.  For beginner investors, two common challenges to sound decision making are knowing what questions to ask and understanding what facts to look out for when assessing potential opportunities. To make matters more challenging, while there is a lot of information out there to help you learn about investing, finding good information can be onerous, sometimes requiring “Buffet-like” patience and scrutiny.

Understanding how to invest in junior mining companies

Given the popularity of junior mining stocks with investors and the enormously speculative nature of the investments, understanding some of the basics of mining and exploration is essential to navigating the sheer number of stories out there. While not a comprehensive list, experts often mention that when considering junior mining companies investors should pay attention to the following:

• The mining company’s structure
• The track record of the management team
• The nature of the deposit itself
• The jurisdiction of the project(s)

To help our readers with their homework, we have put together a selection of resources that help explain important points of investing in junior mining and exploration companies.   The resources we’ve gathered take a fundamental approach to understanding junior mining and exploration companies and cover information on topics such as understanding share structures, basic resource sector terms and concepts investors should be familiar with, how to read financial statements of mining companies and more.

As a note, these sources provide a good overview and starting point but are not intended to be exhaustive.  Keep in mind that the works likely reflect each author’s particular viewpoint and/or interests.  That said, we think these resources offer concise but informative ways of analyzing junior mining and exploration companies.

Michael S. (Mickey) Fulp’s Primer for the Lay Investor series from TheMercenaryGeologist.com

This series of articles is geared specifically towards do-it-yourself investors with little to limited knowledge of resource investing.  These articles reflect Fulp’s concise and ‘no holds barred’ approach to investing in the junior mining and exploration sectors.   According to his bio information, he is a “Certified Professional Geologist with a B.Sc. Earth Sciences with honor from the University of Tulsa, and an M.Sc. Geology from the University of New Mexico.  Mickey has 30 years of experience as an exploration geologist searching for economic deposits of base and precious metals, industrial minerals, uranium, coal, oil and gas and water in North and South America, Europe and Asia.”

Reserves and Resources: A primer for the Lay Investor – Michael S. (Mickey) Fulp (Aug. 25, 2008)

Share Structure, People and Projects: A Primer for the Lay Investor – Michael S. (Mickey) Fulp (Dec. 15, 2008)

The Power of Two: A Primer for the Lay Investor – Michael S. (Mickey) Fulp (May 10, 2010)

The Prospect Generator Model: A Primer for the Lay Investor – Michael S. (Mickey) Fulp (Jul 12, 2010)

Embrace Volatility: A Primer for the Lay Investor – Michael S. (Mickey) Fulp  (Feb. 20/2012)

InformedTrades.com Videos on Mining Stocks

The series explaining mining stocks is a great primer for understanding some of the basics of how a mining company reports its finances, the different company types and other important points about mining stocks.  InformedTrades.com is a website geared towards helping traders learn about investing in forex and other markets.  There is lots of information and promotional material in this site so navigating it can be tricky but if you’re willing to dig through it, there are some neat educational resources.  The youtube channel (here) for InformedTrades also has additional educational material for investors.

Reading Financial Statements of Mining Stocks (Part I)   Jan 31, 2012

Financial Literacy for Mining stocks (Part 2)   Feb 1, 2012

Financial Literacy for Mining Stocks (Part 3)  Feb 2, 2012

Types of Mining Firms  Feb 22, 2012

Mining Stock Intangibles: Management, Investors, Jurisdiction  Feb 13, 2012

Visual Capitalist’s Crash Course in Equity Financing in the Mining Sector

There is both a great infographic and video produced by Visual Capitalist (along with Vadar and Cambridge House International).  Both the infographic and the video tell the story of how junior mining companies typically raise money from investors.

Visual Capitalist also has a great learning centre filled with infographics on a number of commodities and precious metals.   They provide facts and visuals about mining and exploration and as a result often work with companies active in the mining and exploration sectors.  As a note, many of their infographics are either sponsored by a company active in the area they’re describing or commissioned directly by the company.

http://www.visualcapitalist.com/equity-financing-mining-exploration-sector Jan 10, 2013