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In this video I discuss the three major intangible factors I look at in single stock selection: management, investors, and jurisdiction.
I think these are some of the most important considerations, especially if you as an investor are more comfortable with psychology and abstract assessments rather than quantitative, hard science evaluations.
Management: Experienced management that shows they have industry connections is a safer bet. Casey Research (bit.ly/xFJrD4) in particular identifies the top management talent and simply follows them around -- a strategy that has worked very well for them.
Investors: Personally I like to see investors that I regard as "smart money participate in the stock, particularly if it has a small market capitalization and does not yet have positive earnings. Committed investors decrease the likelihood that the company will run out of money before getting to a point of self-sustaining profitability, makes it more likely that other investors will jump on board to drive price up, and can also set the stage for an acquisition that gives shareholders a nice appreciation. I regard major investors like Sprott Asset Management and senior producing firms with market capitalization of 15+ billion USD as being firms that can help lift a small mining company up -- and allow individual investors like myself to follow along for the ride.
Jurisdiction. Being in a safe jurisdiction that is pro-mining is especially important; in many parts of the world miners are at risk of being nationalized or of having special taxes, just for them. Other areas do not have the infrastructure -- i.e. roads, power plants, etc -- that make operations tough, even if there are great minerals in the ground. Other jurisdictions may ban certain mining techniques especially well-suited for efficient mining (like cyanide heap leaching, which is legal in Nevada, USA but illegal in Montana, USA), or may be especially slow in the permitting process. Lots of investors focus on Canada, which has long been a pro-mining, mineral-rich country with a stable political regime.
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