Investing in junior silver mining companies - Precious metals miners

It is "more difficult" for investors precisely because of the absence of large quantities of data. There may be historical drilling results to look at, if a particular land-package has been previously explored. Note that most such "historic" work, is entirely unofficial in that it doesn’t meet more stringent modern standards for mining data, designed to reduce the possibility of some sort of data-fraud being perpetrated against investors.

The only other data which investors may have at their disposal is information from neighbouring mines, if this particular project is situated in an existing mining "camp" (i.e. district). All other data for investors to ponder is generated by the miner itself, (more or less) in "real time".

Such data usually begins with some sort of aerial "imaging" work. With technology in this area having evolved considerably, areas which send especially "strong signals" in such scans can be considered to have a very high probability of mineralization. Thus, one possible entry-point for these early-stage miners is after scanning has been done, but before the first "trenching" or drilling takes place.

"Trenching" refers to a form of near-surface mineral sampling which miners will often choose to engage in before bringing in a drill (and drilling crew). The decision as to whether to "trench" before drilling usually hinges upon one or two factors, although some geological formations are simply more amenable to this preliminary form of explanation.

If the "target" which the miner wishes to explore is very accessible (i.e. favorable geology and supporting infrastructure), or if management’s assessment is that there is a very high probability of success, then miners will often go directly from aerial scans to drilling. Conversely, where the terrain is less-accessible, or if there is less certainty about what will be found, then miners will often choose the less-expensive trenching, which is also faster/easier to conduct in locations without easy transportation access. Thus, if we see a company choosing to proceed with trenching-work after their aerial scanning (rather than moving straight to drilling), then this is a clue that perhaps we should hold onto our cash for the moment – and wait for further data to emerge.

The other key variable to assess in timing our entry into not only early-stage explorers but all miners which have not commenced commercial production is financing. The importance of these events in the life of a junior miner cannot be over-emphasized to investors. Obviously, any company which is not yet producing revenues must have cash on hand to do anything.

No matter how promising a particular property may be, without the necessary capital to fuel the exploration of the project, the miner (and its share price) will stagnate, and eventually sag. This means determining a company’s current cash on hand is always one of our top priorities when we first "screen" and then "select" these companies.

It also provides one of the Golden Rules in mining investing: investing right after a financing takes place maximizes the probability of a near-term rise in the share price, versus nearly any other event in the life of a miner which we can analyze in hindsight. Obviously, spectacular drilling results, strong commercial production, or even an acquisition can cause a near-term spike in the share price of any miner.