The first thing you should look for when evaluating junior gold stocks is its potential for production growth. The biggest problem for junior mining companies is that they are unable to generate profits. This means that the longer the company fails to discover a substantial precious metal deposit the more they are dying.
These companies rely on external funding but when they receive this funding it doesn’t necessarily equate to immediate growth. It may push back the inevitable, the death of the company. You need to find junior gold companies that have the potential for exploration success.
This means that they have found substantial deposits that can be processed and sold for eventual revenues. This is why when one of these companies announces they have discovered a potentially profitable location; its stock price rises.
How To Buy Junior Gold Stocks
A big problem is that over the last 8 years, the industry has been struggling due to very few junior gold companies having good production growth. Hopefully, if the price of gold increases, the industry as a whole will benefit.
If you are looking to invest in one of these companies, it is a lot safer to invest in a junior mining company that has had some relative success with exploration. You should find companies that have at least a small discovery but still have high exploration potential. Never forget that a bunch of small discoveries can add up very fast. So you don’t need to wait for a big discovery all the time.
In terms of industry standards, a junior gold mining company should have 2-3M Au deposits with strong margins. Furthermore, the company should have a production potential of at least 100K oz Au per year. These are the standards that those in the industry want. However, if a deposit is big enough to produce good margins then it should be something players in the industry want.
Like This Article? Check Out Gold Stocks To Buy Or Sell Right Now: Kinross Gold (KGC)
Midam Ventures, LLC | (305) 390-2368 | 1501 Venera Ave, Coral Gables, FL 33146 | firstname.lastname@example.org