What are the Profits and Risks in the Junior Mining Sector?
The mining industry is a major industry in the economy all over the world. This industry includes many major firms with exploration sites all over the world and even smaller companies looking for new deposits and exploration avenues all over the world. Junior mining sector includes mining of gold, silver, other precious metals, coal, and other minerals and metals under the earth’s surface. Junior mining companies are a different ball game for investors in comparison to major mining companies. The junior mining sector includes companies that are in the development and exploration phase and looking at uncovering large mineral deposits.
Investing in the Junior Mining Sector:
Investors have to look at the profits and the risks of the junior mining sector before starting an investment in this sector. There are many companies in this sector and not all have a firm footing and are considered as companies that promise very attractive returns for investors but have no way to guarantee these returns. Investors need to know the difference between a company that has a legitimate chance of getting mineral deposits and a company that has had no research and development and no chance of making it big in the sector. Junior mining sector in investment terms are companies in the low cap market with a market capitalization of less than $500 million U.S dollars.
Profits in Investment in the Junior Mining Sector:
Junior Mining Sector has the potential for the investor to make large profits in the long run if the research and development are sound. The investor usually invests based on a chance that the company is on the right track for getting large mineral deposits based on their ability to discover these deposits and get the land with these deposits to mine. The investors can buy the stock at a lower rate and then once the junior mining company gets a project the stock value can increase tremendously providing investors with a major windfall.
Risks Involved in the Junior Mining Sector:
There are many opportunities in the sector and so many investors look to invest to get high returns. But there are plenty of investors willing to take that chance. After all, a major precious metals find by a junior mining company can really pay off. Just ask Richard Warke, a Canadian mining executive with extensive success in the industry. With over more than two decades of experience in global resource sector Canadian business executive Richard Warke can be called a pure pioneer in this field. However, the junior mining sector also comes with tremendous risk and a risk assessment and calculation has to be done by investors before investing in these companies. The junior mining sector is extremely dependent on the fluctuations in the overall stock market and is likely to see volatility. Many small companies in this sector are in the research and development phase without owning actual mining deposits. This means that if the company is not able to convert their research into a lucrative mining deal, it will become extremely difficult to earn money investing in such a company. These companies may be companies that offer “get rich” schemes to investors and can simply cause major losses to investors in the long run if the schemes do not pan out.
There are many profits to be earned by investors in the junior mining sector but there are also many risks associated with this sector in the economy for investors. This high risk, high reward sector is something investors should study before investing in this sector.