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3 ways to improve your chances with mining stocks

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I’ve been interested in learning more about investing in mining companies for a long time.

For me, the mining industry offers huge returns/losses (not unlike biotech).

A successful investor must be able to grapple with 3 things that sets the mining industry apart from its industrial competitors:

  1. volatility: the double edge sword of quickly rising and falling commodity prices
  2. finite resources/lifespan: a major miner may run out of ore after 15 years while an industrial firm doesn’t face this challenge
  3. need to replace resources: as finite resources run out, mining companies need to find replacement mines and resources — if successful, frequently resulting in big appreciation in share price

So, I invited Dr. Victor Rudenno, who literally wrote the book on valuation in the natural resources industry, onto Tradestreaming to discuss how investors can better their chances with mining stocks.

  1. good track records: want to see if firms have the right people with the right skills to continue success
  2. adequate exploration funds: make sure firms have money in the bank to continue to explore for new resources to replace expiring resources
  3. good acreage: investors here want to look for firms that already have large amounts of land on their books and situated where other explorations have achieved success.

Easier said than done but I appreciate Victor’s framework.  You can check out my interview here.

What resources do you use to research/invest in mining companies?  Let me know in the comments below.

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