This week brings the EduMine webcast on Understanding the Risks of Mining Investment. Today Michael Collins and I presented the first three hours of nine hours of live presentations based on the EduMine course available at this link.
The scene and parameters of mining investing move so fast that inevitably what we say is newer than that in the written, on-line course, but recently updated. Plus Michael is talking for the first time and has not contributed, yet, to the written course.
He made a point about mining investment that I think worth repeating here, so here it follows.
Michael, who has deep experience in developing mines, running them, and financing them, plus a few heart-breaks, makes this point.
Venture capital investments succeed but three time out of ten. In other words if you invest in venture capital ventures, seven times out of ten, you will fail to make any money and may loose your entire investment. He notes that the figures for mining investment are four successes out of ten, or six failures out of ten. Better than venture capital investing. The point is that you have to invest in ten mines in such a way that you make more on four than you loose on six.
That takes money, insight, knowledge, and nerves of steel.
To be fair, Michael is talking of investments in Junior and Mid-Tier mining companies. The numbers are not so bad if you choose to invest in Major mining companies. But at the end of the day, you will probably make much the same, either way.
Most of the so-called experts and bloggers on mining investment will not talk of these things. Most have a vested interest in unbounded optimism. They have to write or say something every day, and they better be upbeat, otherwise readers go elsewhere. That is human nature: seek the optimistic and ignore the downside. There is meat over the hill. Forget about the long trek over the hill.
You cannot now join us in the webcast. You can read the course on EduMine. And maybe in time we will get Michael to help me update the course and maybe in the New Year, once again present a webcast. In the meantime, we would like to hear your comments on his statistics.
I meant to join in to hear what you guys had to say but I am busy with a project.
I would be interested in knowing where his statistics originate, as my own experience with juniors is much worse. Perhaps I’m just a rotten picker, but I think I have some good criteria. First is clear disclosure by qualified professionals. (Note that Barkerville would not qualify under this criterion.) Second is a good executive and management team, composed of geologists, engineers etc who have a track record. I dislike companies where the directors are all financial types. I am currently evaluating a company with that type of board, and I’m already thinking they aren’t going to make it.
Lastly, there was a good article yesterday on a book by Jim Treliving (Boston Pizza) where he says he makes people decisions based on gut feel but money decisions based on analytical data. I try to do the same, but my success isn’t as good as his because my heart sometimes gets in the way of my head.
Here is a link to the Treliving article.
http://www.theglobeandmail.com/report-on-business/careers/management/dragons-den-co-star-says-use-your-head-and-your-heart-to-make-decisions/article4567463/
Enjoying the course Jack. The comment above reflects my limited experience in junior investing too. I usually pick a commodity I like then buy into 6-10 different reasonable looking companies and hope one comes good.