When one mentions junior mining companies, the first thing that comes to mind might be the infamous Bre-X scandal or other similar stories. However, the exploration work conducted by junior mining companies is key to the mining life cycle, and by extension, key to supplying many of the metals we need in modern life.
David Abraham, author of “The Elements of Power — Gadgets, Guns, and the Struggle for a Sustainable Future in the Rare Metal Age,” and director of the Technology, Rare and Electronic Metals Center, explains the importance of junior mining well:
“The challenge is that junior mining companies are like biotech start-ups; most, even those with the most promising projects, will fail,” he writes. “But without biotech, the next great cancer drug won’t be developed; without these junior miners, the world won’t have the ingredients for the next green power source.”
Abraham was speaking about rare metals specifically in his book, but the same goes for more common minerals such as copper or iron as well.
For investors, taking a stake in junior mining companies can certainly be risky. However, by doing extensive due diligence and asking the right questions about junior mining projects, investors can gain access to an extremely effective vehicle for wealth creation.
Take, for example, the surprise nickel discovery at Voisey’s Bay in the 1990’s, which was eventually sold for $4.5 billion and is now one of the largest nickel mines in the world.
To be sure, there’s plenty to keep track of for those that want to get into junior mining. Not only is it necessary to keep an eye on what individual companies are up to, but one must watch metals prices, markets, and even the broader global economy. Even then, getting a mine to production is extremely complex, and a myriad of things can go wrong along the way.
Still, with plenty of research, it is possible for savvy investors to succeed.
To start, here are a few articles we’ve written covering junior mining companies:
Junior Gold Stocks List: The TSXV’s Top Performers
John Kaiser Talks 6 Junior Mining Stocks
Best Rare Earth Stocks: Innovative Juniors?
A Look at Junior Lithium Stocks