Monday, August 29, 2011

All Miners Aren’t Created Equal

I came across this great article earlier today and thought it worth sharing, here is a small excerpt with some interest statistics which show just how difficult it can be to pick the right Gold stocks:
Research from geologist Robert Sibthorpe shows that only one in 2,000 (0.05 percent) companies would ever find 1 million ounces of gold, and that only a third of those would be able to turn that find into production. In addition, research from Barry Cooper at CIBC shows that these discoveries are becoming even more difficult. There were 51 gold/copper porphyry discoveries of +3 million ounces during the 1990s, but only 24 of such discoveries occurred during the 2000s.
In order to find the diamonds in the rough, I use what I call “The Five M’s” for mining stocks. I discussed this process thoroughly in The Goldwatcher: Demystifying Gold Investing, an investor’s guidebook to gold investing I co-authored with John Katz a couple of years ago.
The Five M’s are: Market cap, Management, Money, Minerals and Mine life cycle.
You can read the rest of the article here:

Valuation Gap Makes Gold Miners Attractive But All Miners Aren’t Created Equal


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