Junior mining stocks are, to say the least, of a very speculative nature. In general, they represent potential based on exploration, which mostly has not yet happened. They must play the game the only way they can, by trying to prove their property has value. I think it’s fair to say that most Junior Mining stocks have one goal in mind, which is to find enough proof that one of the Major Miners will find their exploration value sexy enough to discuss a marriage or buy the Junior in its entirety at a premium to their share price. This usually bodes well for shareholders, depending upon the price they paid.

 

So how does anyone find a fair value to a Junior listing during the exploration phase? Let’s assume we are generally discussing Junior gold mining stocks. There are many mathematical equations that can be calculated using a multitude of variables. There are comparable studies based on location, geography, topography, and even proximity to other properties which may be further along in their exploration stage. Of course, there are drill results which give the best possible hint at the potential of what may be pulled out of the ground.

 

 There are always environmental risks and concerns. There are often Political risks. There are accessibility concerns, and rarely does any stock, in any sector not have a concern about weather! You can try to find fair value, not in the physical nature of the stock, but merely on the technical nature of its past, and possible future. All of these and others can play into how to put a fair value on a Junior exploration Company.

 

There is one more way to help you reach a fair valuation. It is Management! In a word, this is the most important feature of the Company. Their actions and how they represent their shareholders interest is paramount to the ultimate success of the Company. Unfortunately there are a number of publicly listed Junior Mining Companies whose Managements acts to their own agenda and self-interest establishing a comfortable setting, to their own design.

 

I have no intention to chastise such behaviour, rather to help you identify Management that will help you succeed. If the goal is to “work the fields” until a suitable dance partner shows up, it is imperative to find a Company who has at least made themselves attractive to a suitor. If you don’t have a keen geological sense, and perhaps lack the technical expertise to study the potential of a stock, you can rely on good Management to take care of that. Do your homework on the people behind the deals. Always be cautious and very wary of the salaries Management takes. Are they solely in this for themselves, or you, the shareholder?

 

Although difficult to determine, their compensation should be based on the performance of their stock(s) and their management and mining history. Management controls options on the Securities precisely for that purpose. Read the news releases and consider any situations that have arisen and how they responded.  Management response should always be available to any shareholders’ inquiries; it is their primary responsibility.

 

Now, I don’t recommend making a habit of calling whenever there may be a hiccup in the price of the shares, but if you feel you may want confirmation that shareholders’ interests are important, make the call. If there is no answer, perhaps it’s time to move on. But with good management, you will likely find someone willing to explain the benefits of an investment in their Company.

 

I have been fortunate to have worked with public Companies whose Managements have performed to the highest standards.  They place their shareholders ahead of themselves in their quest to obtain the best possible results. At times I have been told that the eventual plan is to find a joint venture partner for the company.

 

As well, some managements have worked with little or no pay. They have given up options and bonuses to keep the businesses ongoing and limiting operational costs. They show respect to the people who invest in their businesses and people who shows interest in their company. I have nothing but the utmost admiration in these people, and as such, their Companies.

 

I am honoured to currently work with two such Management teams in particular. Two Junior Canadian Mining Companies that fit my criteria are Peloton Minerals (PMC), and New Carolin Mines (LAD). This type of invaluable information is available to the public if one will put in a little time doing some research. You may find it to be the most valuable tool you have to make a sound investment decision.

Thank you,   Graham Murray                                                                                                                                                                           gmur.4033@gmail.com