Researching Gold/Silver Mining Companies III In Part I of this series, I introduced novice investors to this sector to some of the basic metrics we use to do a preliminary evaluation of these companies. This was followed-up by our Mining Coordinator, Brian Boutilier explaining how he uses similar criteria in his initial “screening process” with these companies. In Part II, I delved more deeply into the data on these companies, focusing on the “producers” and “near-term producers”. In Part III, I will move even further back up the “food chain” of these companies, to the earliest stages of development, to explain to readers the differences in how such companies are evaluated (and valued). This will be complimented by Brian Boutilier’s hands-on “tutorial”, where he applies this methodology in doing a real-life evaluation of one of these companies. As investors saw in the previous installment, valuing producers and near-term producers is a relatively straightforward process. The producers can be evaluated through operational data, while the near-term producers (by definition) have already engaged in some sort of “feasability study” – which is a detailed, scientific analysis of how a particular miner will extract and process the resource, along with a detailed estimate of profitability/return on investment. With earlier-stage mining companies, such simple and straightforward evaluations are not possible, which is why these companies are geared for investors who have already acquired a significant amount of experience/expertise in evaluating these miners. In fact, before we can attempt to evaluate such companies, we must engage in more detailed categorization – which involves ascertaining the objective of a mining company regarding a particular project(s). Why should we bother to take the time (and added risk) to evaluate and invest in such companies? Buy one of these earlier-stage companies at the right time, and you can obtain a return on your investment in weeks which might take years to duplicate through holding a producer/near-producer. Sensing “visions of dollar signs” dancing before the eyes of readers, I will pause at this point to provide a cautionary note to those who are suddenly thinking “get rich quick”. As the old adage goes, markets have a habit of ensuring that “pigs get slaughtered”. Those who think they can waltz into these companies figuring they will make quick trades for fabulous profits almost always manage to destroy themselves... full commentary: http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=15941:researching-goldsilver-mining-companies-iii&catid=48:gold-commentary&Itemid=131
