Investing in Mining Companies for Beginners
if it isn’t grown it has to be mined
you’ve probably heard some variation of
this saying it is used by people
concerned about the environmental
effects of mineral depletion as well as
people bullish on mining stocks
although these two groups have a very
different emphasis when they speak it
they are both right mining is Big
Business almost every commercial product
has elements that started off buried
beneath the Earth here are a few things
that you should know before adding
mining stocks to your portfolio yes in
this video we are going to talk mining
companies or how you can invest in
mining companies so stay tuned into
video Let’s Start
two groups one sector mining stocks are
truly two distinct groups majors and
juniors
the majors are well capitalized
companies with Decades of History World
spanning operations and slow and steady
cash flow
major mining companies are no different
from large oil companies and many of the
same metrics apply with a mining twist
both have proven and probable reserves
except mining companies break down
profit and cost on a given deposit by
the ton instead of the Barrel in short a
mining major is easy to evaluate and
easy to invest in the junior mining
stocks are very nearly the exact
opposite of mining Majors they tend to
have little Capital short histories and
high hopes for huge returns in the
future a junior company is essentially a
smaller or newer company that is
developing or seeking to develop a
natural resource deposit or field
for the juniors there are three possible
fates
most common is a failure which leaves a
hole in everyone’s pocket including that
of the banks and investors the second
fate occurs when a junior has enough
success to justify a major paying a
decent premium to gobble it up leading
to decent returns all around
and the third and most rare fate a
jimier finds a large deposit of a
mineral that the market wants a lot of
it is a magical combination of the right
deposit at the right time
when this happens Juniors can return
more in a few days than a major will
return in years
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valuing major in junior mining stocks
although majors and juniors are very
different they are united by the one
fact that makes all mining stocks unique
their business model is based on using
up all the assets they have in the
ground the catch is that mining
companies don’t know exactly how much is
in a given deposit until it is all dug
up the largest Mining Company in the
world by market cap is BHP with a market
cap of 180 billion dollars
therefore the value of a Mining stock
roughly follows the market value of its
reserves with a premium paid to
companies with long histories of
successfully bringing those reserves to
Market
reserves are evaluated through
feasibility studies
these studies independently verify the
worth of a deposit a feasibility study
takes the estimated size and grade of
the deposit and balances it against the
costs and difficulties of extracting it
all
if the deposit will fetch more money on
the market than it costs to dig up then
it is feasible different risks different
Rewards if a mining major has hundreds
of deposits staked or being mined the
contents of any single deposit aren’t
likely to shake the stock value too much
a major is the sum of all the deposits
with the aforementioned Goodwill tied to
history a change in the market value of
a mineral that makes up a larger
percentage of the deposits will have a
much larger effect than a new deposit or
fail deposit
a junior Mining stock lies or dies on
the results of its feasibility studies a
junior Mining stock typically sees the
most action leading up to and
immediately after a feasibility study if
the study is positive and the value of
the company May shoot up the opposite of
course is also true often a junior minor
won’t mine a feasible deposit to the end
instead they sell the deposit to a
larger Miner and move on to search for
another one in this sense Junior mining
stocks form an exploration pipeline that
feeds the major miners in the end in
this view the big risks and rewards
mostly reside at the junior mining level
I hope now you understand everything
about mining companies but I know you
have some questions in your mind like
how to invest how do I buy gold mining
shares do mining companies pay dividends
if you have these types of questions in
your mind so stay tuned into the video I
will explain one by one
choosing how to invest as an aspiring
mining investor you’re probably
wondering whether you should invest in
junior mining stocks or major mining
stocks the answer depends on what you
are looking for juniors have the
potential to offer a lot of appreciation
in the right Market
this makes them an ideal destination for
risk Capital but hardly the best place
to put your Social Security checks
if you are looking for a lower risk
stock with the potential for dividends
and some decent appreciation then major
mining stocks may be for you
how do I buy gold mining shares to
purchase gold mining shares you can
invest in the stocks of gold mining
companies or the royalties as well as
gold mining exchange traded funds and
mutual funds as with any investment
carefully evaluate the instrument such
as the financials of a gold mining
company and the prospectus and fees of a
fund
our mining stocks considered growth or
value stocks
mining stocks can be either growth or
value stocks Junior mining stocks are
considered growth stocks because they
are in the beginning stage of mining
where they need to discover a specific
commodity in the ground mine it refine
it for sale and sell it these are higher
risk stocks but the upside potential can
be great major mining stocks are value
stocks as they are companies that are
firmly established in the sector do
mining companies pay dividends yes some
mining companies pay dividends not all
mining companies pay them however
typically the larger more established
mining companies known as the majors pay
dividends the smaller less established
mining companies known as the Juniors do
not pay dividends these companies
reinvest earnings back into the company
to fund growth the bottom line This is a
primer and as such suffers from being
overly Broad and simplistic before you
invest in the mining sector you should
probably know what Greenfield
exploration is as well as how to
estimate the impact of pricing risk and
be able to hold forth on the dangers of
buying on a single positive assay
if you are interested enough in mining
to do some research then there is
probably room in your portfolio for both
mining majors and juniors for those who
would prefer to get investing exposure
to the greater mining sector there are
several mining related exchange traded
funds and mutual funds available that
could be added to your portfolio
I hope now you understand how you can
invest in mining companies so that’s it
for today and if you will find my video
valuable so don’t forget to like And
subscribe we will meet again with
another interesting topic till then stay
safe and stay happy
Are you interested in investing in the mining industry? The world of mining investments can often be daunting for beginners and those who are new to the investment landscape. Fortunately, with some guidance and an understanding of the industry, you’ll soon be ready to make your first investmentsdd! In this video, we will provide a comprehensive guide on investing in mining companies as a beginner.