Selecting explorers and junior miners

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#1 Tue, Mar 27, 2012 - 3:56am
Joined: Aug 29, 2011

Selecting explorers and junior miners

Many of us junior mining investors, have their list of stocks they follow and/or are invested in. Our aim is "keeping track of market tendencies and trying to figure out which juniors perform better and why".

In a new blog post, you can read a few things I consider important in selecting explorers and juniors. It also is an extended backing of this opening post.

Writing something sensible on picking explorers doesn’t make me a stock-picking expert. Though I may find a good reason not to consider over half the stocks I come across, there will be enough failures among those I consider suitable picks… and the one real gem in there, I might take a profit on after it doubled… This is the main drive that made me to come up with:

The contributor driven explorer spreadsheet

Pooling efforts with any cooperative peers out there, I started the “contributor driven explorer spreadsheet”. The idea is to get a selection of explorers or junior producers of silver and/or gold. The first focus is on Canadian listed explorers, but I may take on board a junior with main listing on the ASX or the LSE as well.

The selection should then be the basis of a discussion forum open for comments on and links to drilling results for the explorers, operational results for junior producers and investment plans with their financing conditions for both.

Included as a benchmark are some of ‘the classics’: PM Mining leveraged plays NUGT and DUST, PM mining ETF’s: Market Vectors GDX and GDXJ, the Global X Gold explorer ETF GLDX and silver mining ETF SIL, the HUI and XAU mining index.

There is one important difference: Unlike the explorer and junior mining ETF's mainly slanted towards mid-cap stocks, we mainly target precious metal micro-caps with a total market capitalization smaller than $200 M, but small-caps below $1 Billion are also eligible for inclusion. We make distinction between penny stocks and others, but the share price is not considered an inclusion criterion. Successful juniors will remain on the list unless they grow to the mid-cap range (over $2 Billion).

The contributor driven explorer spreadsheet was started late October 2011. After five months, we are just above break even (on March 26). Yet including the stocks deleted (‘exile’-sheet) we would be posting a 2% loss. This disappointing result however compares favourably to the 24.7% loss on the GLDX Etf (which comes closest in focus) or the 20.6% loss on GDXJ.

Starting off, I included a ‘draft category’ of explorers without a thorough selection process. Picturesquely, I call it the selection of the blindfolded chimp throwing darts.

Edited by: Gwyde on Nov 8, 2014 - 5:19am