Research:

Company announcements
A. Company presentations

summary of the company’s operations, financial position, near-term plans and objectives

B. Annual report:

company’s activities, financial performance and corporate objectives.

C. Half-yearly report

half yearly financial results.

D. Quarterly report

previous quarter's exploration (and if applicable) production figures

working capital report showing current cash and debt on hand, and the next quarter's estimated
outgoings.

Stockbroker research reports:

read the 'analyst reports' for information purposes only

Google:

Chat room:

filter quality content from chat room garbage

Checklist:

Business Plan:

Assets: What assets do the company own? Which asset is most important? Is the asset
base diversified?
Exercise (easy): Write a 3 sentence summary of your chosen company's
business plan.
Handy Tip: Check the company's investor presentations and website
Assets:
Exercise (intermediate): Make a list of the company's currently owned assets,
including:
Asset Name
Location
 Description
Percentage owned
Known resources / reserves (refer back to what you've learnt from our Resource
Stocks University chapter)
Rank Asset importance to the company
Handy Tip: Check the company's investor presentations, website and
Google, Google, Google!
Diversification is good- but choose a company with a strong strategy and focus on a
particular sector or geographical location. Too much complexity is to be avoided.

Market Cap:
Small market capitalization (<$200 million)?
Are there any options or warrants?
Enterprise value (EV) market cap + debt, minority interest and preferred shares, minus
total cash and cash equivalents.
Check the company's latest investor presentations, annual reports

Market Sector: up and coming market sector

- identify global market trends. -DAILY EXERCISE
- know when to get out of a dying industry
- Read news articles or blog posts and STT thread every day.

Infrastructure:
Is the company’s asset close to infrastructure: roads, rail etc?
Identify if there is already existing infrastructure in place and if not, are there plans to
do so.
Check the company's investor presentations, website and Google.

Political Risk:
Look for change in government, legislative bodies, local ownership, other foreign policy
makers, or military control.
Even the mention of a possible introduction of a ‘mining tax’ or the introduction of ‘local
equity ownership’.
www.fraserinstitute.org.

Company Lifecycle Stage:

Is the company a pure explorer or in development stage? Do they have resources or
reserves? Have any feasibility studies been undertaken?
Is it undervalued for the stage it is in and why is it?

Cash & cash burn

Read every bit of the financial info.
Read The consolidated financial statement in-depth.
How much are directors getting paid?
How much is spent on travel, office space, administration, and other expenses such as
third party consultants?
Enterprise value (EV) market cap + debt, minority interest and preferred shares, minus
total cash and cash equivalents.

Management:
 Who is managing the company? What does their CV look like?
 Who is on the board of directors?
 Who is the executive management?
 What is the board's area of expertise and what happened to the companies
they ran in the past?
 Has the board or any of the board members successfully overseen a takeover
or a sustained increase in stock price?
 Has the board or any of the board members been involved with
companies that have gone into dilution or administration?

The best indication of the value of a stock is whether a director is buying on market with their
own cash. (not free options and shares)
Prefer management being incentivized via options or performance shares, rather than someone
taking a huge salary from a small market cap company.

Liquidity:
Check weekly/daily/monthly volume
On the flip side, if a major catalyst occurs and people can’t get enough of a stock and it is
illiquid, well, then you are sitting in an advantageous position (NOT OFTEN)

Backers: Are there any high-profile investors or backers?

Price Catalysts:
Make sure the company you are looking to invest in has an upcoming catalyst event.
The price might then spike up when the news is announced, and will usually drop
back down straight away.

The trick here is to sell either just before the news is released, or as soon as the news is
released.

Watch what smart money does just before and on news- react to it.

14. Takeover potential:

- Does the company have a Joint Venture?
- Is there “nearology”?
- Who is operating in the surrounding area?
- Follow companies operating nearby- good results – buy shares based on nearology

Production:
How long will it take until first production? How much capital is required to get the
project up and running? What are the projected cash costs?
There are many projects out there that require huge upfront capital expenditure that
runs in the billions of dollars, whereas the actual market cap of the company is less than
$200 million
- Sell if expected delays, CR or other new risks (infrastructure, sovereign, etc) can be
expected
- Find out the company's predicted production schedule
- Find out the company's predicted capital expenditure
- Check the operation cash cost vs the commodity price. Low cost but price of the metal is
increasing=good position/timing.

.
Future Plans: What is the long term future and price forecasts of the commodity the
company is operating in?
- Read commodity reports from several investment banks.
- Industry reports for supply and demand dynamics and price forecasting.
- Find out the long-term future and price forecasts of the commodity your chosen
company is operating in.
- Read analyst reports produced by stockbroking firms

Hedging: Is there any “hedging”?

If a company is hedged, it locks in a certain price for its production and gives certainty.
But it doesn’t benefit from commodity price appreciation (It’s like fixed loan )
- market generally reacts negatively to significant hedging

Strategy(MT & LT):

You chose a little known well managed company in a good sector(LT) – price
spikes – sell 100% if there is no clear LT/5yr strategy. If not free carry a portion.
A few questions for a oil company:
 Is the oil easy to extract? Is it onshore or offshore?
 Who will pay for the oil to come out?
 Is there an existing pipeline nearby to export the oil? How much will it cost to connect to
it?
 Is there a refinery nearby to process the oil into sellable products?
 Who will pay to build a refinery? Are there other nearby producers who will need a
refinery?
 Is the refinery and pipeline in the same country, or will there be negotiations with other
governments who will take a huge cut?
 How much are nearby producers selling the oil for?
  Will the oil be sold domestically or internationally?
 Which net oil importing countries are close by?
 How are the relationships between the governments?

Change: What if there is some sort of material change after you have invested?
A surprise capital raising, a new director appointment, or a problem with one of the
company assets----Revaluate------IF IN DOUBT – GET OUT!

Chat Room Hype:

Is there internet chat room hype? Has the “dumb money” arrived?
- Invest in a stock BEFORE the stock becomes active on internet chat forums.
- Watch unusual trades in un-hyped stocks – research – buy/join the smart money
before the crowd enters.