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Hey hey – another week is upon us, so let’s dig in. Metals, stocks, and above all, opportunities.
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Some sectors allow casual observers to easily waltz in, without much specific knowledge. Alas, mining & metals is not one of those sectors.
Investors must take great care in assessing available information to understand the characteristics and potential of a company’s project portfolio.
Make sure you’re buying something geologically sound.
Tavi Costa, Crescat Capital
Whether you’re getting some bargains or waiting on the sidelines with all the uncertainty and volatility, one thing is true: it is always the perfect moment to improve your skills and learn more about the themes and industries you care about.
In my opinion, all mining investors (or those wanting to enter the sector) need at least a basic knowledge of these 5 crucial concepts:
- The difference between resources and reserves
- The range of deposit types and associated minerals
- The variety of economic studies
- The main drilling techniques and characteristics
- The full mining industry’s lifecycle
Of course, these are not the only topics you’ll need but it’s a good place to start.
Firstly, resources and reserves… do they really matter that much? In short, yes! So you’ll need to grasp their differences. Not only value will be vastly different, but also risk.
On to deposit types. You’ll think this is just a matter for geologists and the company but it turns out investors are well served to know. This is mainly because what constitutes a ‘good grade’ is never a blanket statement and will always depend on the type of deposit. Different deposits will have different impurities, optimal processing techniques and so on. We’ll discuss grades in a future newsletter as this is a big topic.
Economic studies will provide ways to put a value in the whole endeavour (discussed in this issue) but also because the different outputs from studies will provide a way to compare different projects and even other types of investments.
Drilling techniques may be a bit controversial in this list, but hear me out. While it’s true you don’t need to know much about how exactly drilling takes place, what I suggest is highly valuable is to learn the general types of techniques, when during the mining lifecycle these are mostly used, and an idea of what budget and result expectations will be.
Lastly, the mining lifecycle is to me, probably the first new investors must familiarize themselves with. The good part is it’s not terribly hard, and will allow you to set your investment horizon realistically (I wrote about this in a past newsletter too).
If you enjoyed this, please share it with a friend. The energy transition requires more savvy, committed investors and supporters joining in, to fully enable it.
That’s it for today.
A popular tweet from last month
Keeping track of what resonates is a great indication of investor sentiment. This one got a lot of attention!
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Disclaimer: Opinions and materials presented are not investment or financial advice and are intended for informational and educational purposes only; please consult a financial advisor before investing. Companies mentioned publicly may be held and/or clients, except within the member section. Content might contain affiliate links. By reading or sharing, you agree to our full disclaimer.
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