Investing in Junior Mining Companies – Challenges and Opportunities
What are the key challenges? We have used 3 key pillars to identify challenges and opportunities that can assist investors to select companies for investments.
- TIMING – look out for right entry points and exit points. This sounds very basic and obvious. But being disciplined and rigorous to match the investment horizon to the mine life cycle is key.
- MOTIVES – Whom are you speaking to? What is the management’s motive to run a junior mining company? Is it a team of geologists that are passionate about making a new discovery? Or are you talking to a serious (and serial) mine building team for a development project?
- INCENTIVES – need to support the motives of management and the entire team. Incentives can be structured in many ways, but the key principle is to have a management team that is fully aligned with shareholders