Mining Stocks
While sometimes risky, mining stocks can also be strong performers when commodity prices move up. However, due to the volatility of these stocks, Pat McKeough recommends that they only form a modest part of a well-balanced portfolio.
Canadian penny mining stocks are some of the riskiest stocks you can buy. These companies are trying to find mineral deposits that mine at a profit and such a find are exceedingly rare. Because of this, it’s even more important to look for investment quality in penny mines.
For example, we automatically rule out investing in penny mines that promote themselves too aggressively or do so misleadingly. The mine-finding effort is more likely to succeed if the managers focus on finding a mine rather than hyping their stock.
Junior mining stocks are usually smaller companies that typically take on riskier mining projects. However, if a junior mining stock is successful at finding and mining, it can mean huge returns for investors.
No matter what type of mining stocks, or other stocks you invest in, TSI Network recommends following our three-part Successful Investor strategy:
- Invest mainly in well-established, mostly dividend-paying companies;
- Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; and Utilities);
- Downplay or avoid stocks in the broker/media limelight.
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Pat McKeough responds to many requests from members of his Inner Circle for specific stock advice as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle.
Recently an Inner Circle member asked us about a uranium mining and exploration stock. Uranium Energy Corp. has one producing mine and several development-stage projects in Texas as well as exploration projects elsewhere. Pat examines the prospects for this junior in light of the growing demand from nations that still have millions living without electricity. He balances that against the competitive and regulatory issues that nuclear power faces in the U.S. and Canada as it competes with liquefied natural gas (LNG) as a fuel source.
Q: Hi, Pat: I would like your opinion on Uranium Energy Corp. Thank you.
...
Recently an Inner Circle member asked us about a uranium mining and exploration stock. Uranium Energy Corp. has one producing mine and several development-stage projects in Texas as well as exploration projects elsewhere. Pat examines the prospects for this junior in light of the growing demand from nations that still have millions living without electricity. He balances that against the competitive and regulatory issues that nuclear power faces in the U.S. and Canada as it competes with liquefied natural gas (LNG) as a fuel source.
Q: Hi, Pat: I would like your opinion on Uranium Energy Corp. Thank you.
...
Every Monday we feature “A Stock to Sell” as our daily post. With every stock or investment we recommend as a sell, we give you a full explanation of why we advise against investing in it at this time.
Arafura Resources $0.05 (symbol ARU on the Australian exchange; www.arultd.com), is an Australian firm with a rare earth property in the country’s Northern Territory.
Rare earth elements are a group of metals with unique characteristics. They are fairly common in the Earth’s crust, but due to their geochemical properties, these elements are usually dispersed and not routinely found concentrated as minerals in economically exploitable ore deposits. Thus the name “rare earth.”
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Arafura Resources $0.05 (symbol ARU on the Australian exchange; www.arultd.com), is an Australian firm with a rare earth property in the country’s Northern Territory.
Rare earth elements are a group of metals with unique characteristics. They are fairly common in the Earth’s crust, but due to their geochemical properties, these elements are usually dispersed and not routinely found concentrated as minerals in economically exploitable ore deposits. Thus the name “rare earth.”
...
Every Tuesday we bring you “Best Canadian Stocks.” You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You’ll read about stocks making moves you should know about, from coverage in one of our three newsletters featuring Canadian stocks—The Successful Investor, Stock Pickers Digest and Canadian Wealth Advisor.
SHERRITT INTERNATIONAL (Toronto symbol S; www.sherritt.com) sold off all of its coal interests for $793 million in cash in April 2014.
The company is now focused on nickel production, with operations in Cuba and Canada. As well, it has a 40% interest in the Ambatovy nickel mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and manages 506 megawatts of power generation capacity in Cuba.
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SHERRITT INTERNATIONAL (Toronto symbol S; www.sherritt.com) sold off all of its coal interests for $793 million in cash in April 2014.
The company is now focused on nickel production, with operations in Cuba and Canada. As well, it has a 40% interest in the Ambatovy nickel mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and manages 506 megawatts of power generation capacity in Cuba.
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IAMGOLD (Toronto symbol IMG; www.iamgold.com) owns 41% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 90% of its Essakane gold mine in Burkina Faso; 100% of the Doyon mine in Quebec; and 95% of the Rosebel mine in Suriname, South America. In addition, IAMGold has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories. It also owns the Niobec niobium mine in Quebec. When used as an additive, niobium makes steel stronger, more heat-resistant and easier to weld. In the three months ended March 31, 2014, IAMGold’s revenue fell 8.5%, to $279.3 million from $305.3 million a year earlier. Cash flow per share dropped to $0.17 from $0.31. The declines were mostly due to 21.2% lower gold prices and an 8.5% production decrease....
AURICO GOLD (Toronto symbol AUQ; www.auricogold.com) operates the El Chanate gold mine in Mexico, which produced 71,864 ounces in 2013. The company’s Young-Davidson gold mine in Northern Ontario reached full production in 2013, with total output of 120,738 ounces. The project’s output should rise to over 152,000 ounces this year....
Pat McKeough responds to many requests from members of his Inner Circle for specific advice on stocks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. This week we had a question from an Inner Circle member about a junior mining stock operating in Africa. Nevsun is one of those mining stocks that bears a good deal of political risk, with its main property located in Eritrea, in the often-troubled Horn of Africa. However, the company has a productive mine and pays a high-yielding dividend. Pat examines the chain of events that have left Eritrea one of the poorest nations on earth and looks at Nevsun’s prospects of success in this environment. ...
Pat McKeough responds to many requests from members of his Inner Circle for specific investing advice as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle....
Gold has dropped over 30% from its high near $1,800 U.S. an ounce in September 2012 to $1,228 today. That’s partly because the U.S. Federal Reserve has indicated that it is likely to scale back its bond-purchasing program, known as quantitative easing. Slowing down the growth in the money supply will reduce the likelihood of a sharp increase of future inflation. Since many investors buy gold as a hedge against inflation, its price has weakened. The best way for aggressive investors to invest in gold is to buy shares of companies with rising production that will give them steady cash flow even if gold prices fall further. Here is our assessment of one of the gold stocks we cover for Stock Pickers Digest....
HECLA MINING COMPANY (New York symbol HL; www.hecla-mining.com) explores for, mines and processes silver and gold in the U.S. and Mexico. Most of its silver output comes from its Greens Creek mine in Alaska and its Lucky Friday mine in Idaho. In the three months ended June 30, 2013, Hecla’s revenue rose 27.3%, to $85.3 million from $67.0 million a year earlier. The company lost $0.03 a share, compared to a profit of $0.01. The loss mostly came from lower silver prices and costs related to its recent acquisition of Aurizon Mines....
YAMANA GOLD (Toronto symbol YRI; www.yamana.com) owns eight operating gold mines in Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold mine in Argentina and has a number of other properties in advanced stages of development. In the quarter ended March 31, 2013, Yamana’s revenue fell 4.4%, to $534.9 million from $559.7 million a year earlier (all figures except share price and market cap in U.S. dollars). Gold production rose, but prices for gold, as well as copper and silver, which are both significant by-products of Yamana’s gold mining, dropped. Cash flow per share fell 3.3%, to $0.29 from $0.30....