TLDR;
Jacques Beno, a geologist with 45 years of experience, shares his insights on investing in junior mining, drawing from his book "The Art of Investing in Junior Mining." He emphasizes the cyclical nature of the junior mining sector, the importance of understanding risk and reward, and the need to act like a trader rather than a long-term investor. Beno also discusses key factors for evaluating companies, including management quality and market trends, and highlights the influence of global events and figures like Donald Trump on commodity prices. He provides specific stock picks and advises on jurisdictional risks, offering a comprehensive guide for both new and experienced investors in the junior mining market.
- Cyclical nature of junior mining requires buying low and selling high.
- Exploration offers high rewards but also high risk.
- Key factors for evaluating companies: management, market trends, and project quality.
- Global events and figures like Donald Trump can significantly influence commodity prices.
Intro [0:00]
Charlotte Mloud from investingnews.com introduces Jacques Beno, a geologist with 45 years of experience in exploration and development, and the author of "The Art of Investing in Junior Mining." Jacques shares his background, starting as a field geologist and eventually becoming VP of exploration and president of a junior exploration company. After retiring in 2004, he developed a passion for investing in junior mining and began giving conferences on the topic. He wrote his book to share his knowledge, attract new investors, and provide them with the essential rules for evaluating companies in this sector.
Jacques' golden rules [2:34]
Jacques outlines his golden rules for investing in junior mining, emphasizing the cyclical nature of the business. He advises buying low and selling high, noting that while traditional stocks may offer steady growth, junior mining stocks experience significant ups and downs. He highlights that exploration offers the highest potential rewards but also carries the highest risk, while investing in companies starting mine construction is less risky but offers lower rewards. Jacques points out that discoveries are rare but the sector is full of mini-bubbles, where stocks can double or triple after a discovery, typically lasting 4 to 18 months. He also introduces the 80/20 rule, stating that 80% of profits come from 20% of investments, meaning not every investment will be a success.
Deciding when to sell [5:32]
Jacques stresses the importance of acting like a trader and learning when to sell stocks, rather than holding them indefinitely like Warren Buffett. He mentions that the book includes 25 lessons derived from the golden rules, emphasizing that investing in junior mining is an emotional game and a way to learn about oneself. He advises that to make money, one must understand the current cycle, identify metals that are currently popular ("flavor of the month"), and assess the quality of the company's management.
Trump's mining influence [9:17]
Jacques believes that Donald Trump is the best promoter the commodity and mining sector has ever had, as his actions and policies inadvertently promote commodities like uranium, rare earths, and copper. He argues that the rising price of gold is partly due to Trump's influence. Comparing the current market to previous gold bull runs, he notes that while past cycles saw increases of 600% to 1,000%, the current increase is only at 400%, suggesting further potential growth if Trump continues his current trajectory.
Timing market trends [11:37]
Jacques discusses how bullish phases typically begin with rising gold prices, followed by silver and then copper. Other metals like vanadium, uranium, and rare earths may follow. He is currently interested in rare earths and lithium, noting that he invested in lithium when prices appeared to be at their bottom, supported by technical analysis such as the golden cross pattern. He also made profitable investments in rare earth companies when Donald Trump discussed rare earths and trade battles with China.
Red flags for juniors [14:32]
Jacques explains that his valuation system is based on factors like shares issued, share price, and comparisons with similar companies, along with assessing the management team. He emphasizes the importance of identifying red flags, which don't necessarily mean selling a stock but warrant further investigation. Examples of red flags include press releases highlighting one exceptional drill result while the other results are poor, or drill results where all the gold is concentrated in a single meter, suggesting potential manipulation of the reported values. Other red flags include management selling shares.
Junior stock picks [17:28]
Jacques shares several stock picks, noting that it's currently difficult to find companies poised to multiply tenfold. For gold, he mentions G2 Gold (GTO.V) in Nevada, which has a low market cap relative to its gold resources, and Tease Gold in British Columbia. He also likes Liberty Gold in the US. For copper, he suggests Copper Giant in Colombia, which has a large deposit, and PICO in Peru, which has a significant treasury and potential for richer copper zones. In the Dominican Republic, he likes Precipitate Gold, and in Newfoundland, he is interested in Firefly Metals, which is developing a massive sulfide deposit.
Jurisdictional risk [21:18]
Jacques shares his views on jurisdictional risk, noting that while the Ivory Coast has potential for discoveries, its location in Africa adds uncertainty. He would avoid investing in China and Russia, preferring Canada and South America. He suggests that the best approach is to focus on stable jurisdictions like Finland or the Americas to reduce risk.
Outro [23:33]
Jacques expresses his satisfaction that his book has sold in 10 countries and is helping people better understand the mining industry. He is also giving talks at universities to finance students, indicating a growing interest in commodities. Charlotte thanks Jacques for sharing his insights and encourages viewers to check out the book.
