My thoughts and stories on junior mining explorers as an ex-geologist, and where else you should focus to potentially win in the financial freedom lottery.
Thanks Jordan, very thoughtful piece! I looked at the share price history of Sirius (https://www.intelligentinvestor.com.au/shares/asx-sir/sirius-resources-nl/share-price). The SP went from 5c to 3$ in 4 months (July'12 - Nov'12). Do you think there's an opportunity in identifying discoveries during the 1st month after the hit and then riding some of the upside.
Definitely! Just let the big metal truth detector do it's thing (drill rig) if you see some good drill hits from a new prospect (important) leading to a discovery, look at what they're saying about the potential to extend on those results. It's tricky as a company will always say the potential is there. Once a few lines of drilling are completed along strike and down-dip of the initial results you will have a good idea of the width, thickness and length. Catching these things early is a great way to make money - exactly like you said with WA1. I'd advise to wait for drilling results before investing in anything.
Nice article man - My take home would be use only 5% ish of your wealth (depends massively on your wealth obvio, I'd want minimum 100k portfolio USD before I started investing in juniors, but I am very conservative..) to play in the junior sector, & wealth that you are absolutely comfortable losing 😂
Currently writing a piece myself on how I discovered Asymmetrical Investing from Ferg when I used to live in Bali with you two blokes 🙌
5% is a great number, unfortunately I've sized bigger than this is my current portfolio & learned a lesson, which was basically the point of this article.
The differences between the two stocks I mentioned at $30m MC is huge. While both have arguably the same lottery winning reward as the upside payoff.
Great write-up. Thank you. Also started to follow Trader Ferg recently :-). When thinking about investments into more stead businesses I can recommend listening to podcasts by Mohnish Pabrai, who copied his investment approach from Buffet and Munger and has a similiar approach to find hated industries. Hes big in met coal, too.
Great post, it is really hard to make money on the junior sector when there is so much risk involved. I found your blog because I found the company Pampa Metals and I invested on them, I was searching to see who else was talking about them on the internet and I found your post.
From my years of experience, nowadays I just invest on companies after having a discovery, never on the exploration phase (this is the most risky where mostly of the companies die). So it is necessary to have the discovery and the follow up holes. I check mineralization (always try to see photos of the core, if they don’t release photos can be a red flag) to see if it seems to be continuous, the way that they release the composites to see if they are smearing (if they don’t release individual assays depending on the kind of deposit it can be a red flag) or if it is really continuous down hole. Continuity along strike is also necessary to check to see potential volume. Also geopolitical risky, it is very important to keep in mind that the right deposit in the wrong place is not appreciated by the market.
In my opinion to invest in this sector it is very important to look at a lot of companies to be able to know what is the fair price of the company based on the stage that they are, based on what they already have achieved. It is like buying a property in a city that you are not familiar with, you need to looks at many options to be able price it and decide if it is cheep or expensive.
What is your top 4 companies that you believe are a good investment in the long term?
Yep, most sensible people I talk to with extensive experience investing in the space won't touch a company until it has a discovery. A lesson I've learnt over the years.
Totally agree, you need to cover a tonne of companies in the sector, it can be quite overwhelming & time consuming with the sheer number out there as retail investor.
Hard to say, but my idea of a flight to safety once I'm out of uranium will be the Australian coal companies, WHC, NHC & YAL etc...
Thanks Jordan, very thoughtful piece! I looked at the share price history of Sirius (https://www.intelligentinvestor.com.au/shares/asx-sir/sirius-resources-nl/share-price). The SP went from 5c to 3$ in 4 months (July'12 - Nov'12). Do you think there's an opportunity in identifying discoveries during the 1st month after the hit and then riding some of the upside.
Recent example is WA1 resources: https://finance.yahoo.com/quote/WA1.AX/.
How would you go about detecting such stories as they develop?
Definitely! Just let the big metal truth detector do it's thing (drill rig) if you see some good drill hits from a new prospect (important) leading to a discovery, look at what they're saying about the potential to extend on those results. It's tricky as a company will always say the potential is there. Once a few lines of drilling are completed along strike and down-dip of the initial results you will have a good idea of the width, thickness and length. Catching these things early is a great way to make money - exactly like you said with WA1. I'd advise to wait for drilling results before investing in anything.
Nice article man - My take home would be use only 5% ish of your wealth (depends massively on your wealth obvio, I'd want minimum 100k portfolio USD before I started investing in juniors, but I am very conservative..) to play in the junior sector, & wealth that you are absolutely comfortable losing 😂
Currently writing a piece myself on how I discovered Asymmetrical Investing from Ferg when I used to live in Bali with you two blokes 🙌
5% is a great number, unfortunately I've sized bigger than this is my current portfolio & learned a lesson, which was basically the point of this article.
The differences between the two stocks I mentioned at $30m MC is huge. While both have arguably the same lottery winning reward as the upside payoff.
Great write-up. Thank you. Also started to follow Trader Ferg recently :-). When thinking about investments into more stead businesses I can recommend listening to podcasts by Mohnish Pabrai, who copied his investment approach from Buffet and Munger and has a similiar approach to find hated industries. Hes big in met coal, too.
Thanks Patrick, I'll note that down now. 🤝
Great post, it is really hard to make money on the junior sector when there is so much risk involved. I found your blog because I found the company Pampa Metals and I invested on them, I was searching to see who else was talking about them on the internet and I found your post.
From my years of experience, nowadays I just invest on companies after having a discovery, never on the exploration phase (this is the most risky where mostly of the companies die). So it is necessary to have the discovery and the follow up holes. I check mineralization (always try to see photos of the core, if they don’t release photos can be a red flag) to see if it seems to be continuous, the way that they release the composites to see if they are smearing (if they don’t release individual assays depending on the kind of deposit it can be a red flag) or if it is really continuous down hole. Continuity along strike is also necessary to check to see potential volume. Also geopolitical risky, it is very important to keep in mind that the right deposit in the wrong place is not appreciated by the market.
In my opinion to invest in this sector it is very important to look at a lot of companies to be able to know what is the fair price of the company based on the stage that they are, based on what they already have achieved. It is like buying a property in a city that you are not familiar with, you need to looks at many options to be able price it and decide if it is cheep or expensive.
What is your top 4 companies that you believe are a good investment in the long term?
Yep, most sensible people I talk to with extensive experience investing in the space won't touch a company until it has a discovery. A lesson I've learnt over the years.
Totally agree, you need to cover a tonne of companies in the sector, it can be quite overwhelming & time consuming with the sheer number out there as retail investor.
Hard to say, but my idea of a flight to safety once I'm out of uranium will be the Australian coal companies, WHC, NHC & YAL etc...