Investing in Mining 101

Investing in the mining sector allows investors to participate in one of the largest and most important sectors in the global economy.  Investing in mining can bring investors amazing profits but investors need to understand the nuances in this sector and how companies in this sector are valued.

In this section of our site, we hope to provide some of the basic knowledge you need in order to get started in investing in mining companies.  

Please remember that all information on our website is for your education and entertainment only and while knowledge we provide can be helpful, our articles should not be taken as professional investment advice or recommendations to purchase any specific securities.

Investing mining 矿业投资

Investing in Mining 101

Mining stocks can generally be divided between the majors and juniors. The majors are typically mining companies that operate producing mines on a global scale and have proven methods for consistent output year over year.  In reviewing these companies as potential investment opportunities, looking at their operating track record, revenue and profit performance, as well as their regional and macroeconomic risks are important, much like other stocks.

Junior mining stocks, on the other hand, are usually smaller companies and take on risky mining exploration. If a junior mining stock is successful at finding a mineable mineral deposit, it can mean huge returns for investors.  Junior mining stocks offer the investor with the potential for significant growth, given the speculative nature of the investment.

Junior Mining

Keep risk in mind with junior mining stocks.  Even though junior mining stocks have strong profit potential, they entail higher risk than more established mining companies, for a number of reasons.  These stocks are generally suited for your high risk and high return portion of your portfolio.

For one, the odds that the companies behind junior mining stocks will find an “anomaly,” or a geological formation that might attract a prospector’s interest, are slim. One rule of thumb is that you have to look at 1,000 anomalies to find one prospect. And fewer than one prospect in a thousand turns into a mine. In other words, finding a mine is a million-to-one shot. Many investors use junior mining stocks in a similar way to how venture capital investors invest in start-ups: they make small investments in numerous companies so that each individual investment, while risky, does not greatly affect the value of the portfolio if it fails, but a major success in any single investment can provide significant growth.

Investing mining

Understanding the Different Metals

When we talk about junior mining, we are actually talking about companies that are exploring and developing mines for many dozens of types of metals, each with their own demand and economic profiles. While mining companies are all involved in extracting metals or other useful materials from the ground, the investment proposition for a gold exploration company is significantly different than that of a copper exploration company.

In this section we are helping our readers understand what we feel are the most exciting metals sub sectors currently. These include:

GOLD &
PRECIOUS METALS

Precious metals are rare, naturally occurring metallic chemical element of high economic value.  Precious metals include gold, silver, platinum and palladium. Click here to learn more about Gold and Precious Metals.  

ELECTRIC &
BATTERY METALS

A new and exciting category of metals, electric and battery metals have become an important part of the mining sector.  These metals are used in the production of battery technologies or for the production of clean energy. Electric and Battery Metals include lithium, uranium, the rare earth elements, and graphite. Click here to learn more about Electric and Battery metals.

BASE
METALS

A base metal is a common and inexpensive metal, as opposed to a precious metal such as gold or silver.  Base metals include copper, lead, nickel, and zinc, but also a multitude of other metals that are used in numerous industries. Click here to learn more about Base Metals.

OTHER MINING SUBSECTORS

Besides the precious metals, electric metals and base metals, there are numerous other subsectors of mining materials.  From valuable minerals like diamonds, jade and other gemstones, to commodities like coal, potash and oil sands, there are public companies that focus on these economically important minerals. Click here to learn more about metals in other subsectors.