Searchlight Resources Inc (SCLTF)

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How to Find and Evaluate Junior Mining
Companies for Investment Purposes
by Rick Langer

Management

While research reports, analyst recommendations and online newsletters are great sources of information and invest-ment ideas, the single most important consideration when evaluating a junior mining company is management.

From an investment perspective, a good management team can make the difference between owning a stake in a successful mining company or having a worthless stock certificate. Good management can ensure that a company survives in bad times and excels in good times. Successful mining entre-preneurs surround themselves with the right people and have a clear vision of how to run and grow their companies. This vision should include ambitious but achievable goals. These milestones provide a good way for both management and investors to monitor a company’s progress. If a company has missed its targets without good reason, investors should re-evaluate their investment.

A clear vision is exceptionally important. Management has to know, from the outset, how to proceed and accomplish its stated goals. One-on-one meetings and conversations with senior members of management are the best ways to learn, understand and get to know their philosophy and methods. After all, shareholders own these companies. Every president of a successful public company is different in his or her approach, management style and a whole slew of other tangible and intangible characteristics.

We feel that some common characteristics and traits of successful mining entrepreneurs include perseverance (bullheadedness to the point of bankruptcy), unwavering belief in their theories and risk taking.

Past experience, knowledge and specific expertise are of great importance. Quite often, senior professionals from global mining companies leave their employers, after decades of dedicated service, to start up a new venture. They are often successful, but sometimes lack the experience and know-how to run a small exploration company with a limited budget. Their biggest downfall is usually their lack of a public presence and the ability to raise funds. Some very successful mining companies have started as a combination of established mining groups creating the right combination of circumstances to attract these senior mining professionals.

Good management, because of its inherent nature and reputation, will gravitate to the better and more prospective mining properties. Through past experience, management will know fairly well where and what to look for in mining properties. Prospectors, small miners and property owners will be more willing to sell and joint venture good properties with known and capable mining entrepreneurs.

An investor’s evaluation has to include percentage of current shareholdings and options held by senior management. Senior officers and directors should have a significant stake in the company. High salary levels should be commensurate with performance and ability to raise capital. Insider trading reports provide a good way to keep track of shareholdings.

http://magazine.mining.com/issues/1003/Vol03-02-HowToFindAndEvaluateJnrMiningCompaniesForInvestment-06-07.pdf