Here are 8 red flags you don’t want to find while researching your next mining investment [Twitter thread unrolled]

Every successful investor excels at spotting potential risks fast.

Whether by instinct or training, it’s a crucial skill.

Here are 8 red flags you don’t want to find while researching your next mining investment:

Red flags are nothing more than *potential* dangers in the fundamentals of a company.

I’ll list them from minor to serious impact.

They do the most damage when multiple appear together.

(and even more, if combined with bonus #9)

🚩 Too many projects in portfolio

Why?

Shows a lack of focus or confidence in the flagship asset.

How to find out?

Visit the company’s website and check under projects, or operations, and then, go to the latest annual report or M&D and review their balance sheet

1/9

🚩 Unfocused leadership

Why?

When top executives have multiple executive roles -more than 2, I’d say-, priorities and time may be too stretched.

How to find out?

A simple Google Search usually does the trick, and/or just check LinkedIn.

2/9

🚩 No institutional investors

Why?

A balanced and supportive cap table needs to also include institutions that believe in the company.

How to find out?

Most presentations will highlight top shareholders. You can find out on @MarketIndexAU or @Canadianinsider

3/9

🚩 Environmental assessment takes a lot longer than average for jurisdiction

Why?

Permit delays can seriously hamper the chances of an advanced project becoming a mine.

How to find out?

Review news releases plus local news in the country of operation.

4/9

🚩 Management has little to no skin in the game

Why?

You want top execs aligned with investors and sharing at least some of the risk.

How to find out?

See red flag #3.

5/9

🚩 Declining dividends

Why?

For producers, falling earnings and/or dividend yields are a worry, if not a broad market situation. Can mean higher costs, lower grades, inefficiencies or all combined.

How to find out?

FS for full details

6/9

🚩 Negative actions by top executives

Why?

The activities and reputation of leadership are a direct reflection of the company’s potential.

How to find out?

Check social media, news in HQ/listing country, and any applicable regulatory bodies.

7/9

🚩 Management selling out fast

Why?

When management is getting out in a big way, things look bleak for the company. Who knows what is hiding?

How to find out?

Again, try @MarketIndexAU or @Canadianinsider, plus recent filings with relevant exchanges

8/9

Bonus

Finding one or two may be nothing.

Now get two or more and combine them with some of these ‘red flags on steroids’…?

Extreme caution is suggested.

9/9

Are you holding a 'lifestyle company' in your junior explorers' stock portfolio?
Or considering one that might be?

5 questions to find out FAST, and reduce your risk:

— Paola Rojas 🐝 (@paola_rojas) July 16, 2022

That’s a wrap!

Training yourself to spot red flags quickly will improve your decisions and help reduce risk.

TL:DR

• # projects
• No focus
• No instos
• Delays
• No skin
• Dividends down
• Shady actions
• Insiders selling
• 5 Qs

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Follow me @paola_rojas for commentary and threads on metals, markets and tech.

Every successful investor excels at spotting potential risks fast.

Whether by instinct or training, it's a crucial skill.

Here are 8 red flags you don't want to find while researching your next mining investment:

— Paola Rojas 🐝 (@paola_rojas) December 6, 2022

Originally tweeted by Paola Rojas 🐝 (@paola_rojas) on December 6, 2022.