The copper miner fired on all cylinders last month. As a result, the company has built up a cash-rich balance sheet, which provides it with the financial flexibility to pay a growing dividend and invest in expanding its Tier One mining portfolio. Therefore, the value of a mining stock roughly follows the market value of its reserves, with a premium paid to companies with long histories of successfully bringing those reserves to market. If it isn't grown, it has to be mined. This is a primer and as such, suffers from being overly broad and simplistic. Those factors put the company in a strong position to deliver on its vision of becoming the most valued gold mining business in the world. Major mining companies are no different from large oil companies, and many of the same metrics apply with a mining twist. The junior mining stocks are very nearly the exact opposite of mining majors. Featuring Gold, … Here are seven top mining stocks to buy on the inflation trade. My favorite risk/reward silver mining stocks for 2020. BHP Billiton (NYSE:BHP) is a diversified resources company. It also has a petroleum business that produces oil and gas. Riot Blockchain is one of the few cryptocurrency mining stocks on the NASDAQ. Your first step is to learn about the industry. Often, a junior miner won't mine a feasible deposit to the end. If a mining major has hundreds of deposits staked or being mined, the contents of any single deposit aren't likely to shake the stock value too much. You've probably heard some variation of this saying. Nov 11, 2020, Motley Fool Transcribers | These are good bets to outperform no matter who wins November 3. The mining sector is popular among investors as it produces a steady stream of both previous and industrial-use metals and other raw materials. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Investors split the sector into two main groups: majors and juniors. A junior company is a small company that is looking to find a natural resource deposit or field. For the juniors, there are three possible fates. These substances include: The mining industry is rapidly changing in the current economic climate. Mining stocks are truly two distinct groups: majors and juniors. Instead, they sell the deposit (or themselves) to a larger miner and move on to search for another one. Here are a few things that you should know before adding mining stocks to your portfolio. Rio Tinto (NYSE:RIO) is a diversified mining company. There are 17 rare earth elements but cerium, neodymium, lanthanum, … If the study is positive, then the value of the company may shoot up. A junior mining stock lives or dies on the results of its feasibility studies. With those characteristics in mind, here are some of the top stocks in the mining sector: Here's a closer look at these top mining companies. It operates mining assets in Australia and in North and South America that focus on copper, iron ore, coal, nickel, zinc, and potash. Low valuations versus their upside potential. Market data powered by FactSet and Web Financial Group. WPM earnings call for the period ending September 30, 2020. Millennials: Finances, Investing, and Retirement. These studies independently verify the worth of a deposit. Because of that, they're in high demand during periods of expansion, which drives up prices, boosting miner profitability. Albemarle's numbers weren't as bad as feared. The Ascent is The Motley Fool's new personal finance brand devoted to helping you live a richer life. Let's conquer your financial goals together...faster. The opposite, of course, is also true. Barrick Gold has also made it a priority in recent years to strengthen its balance sheet by selling noncore mines and using the cash to repay debt. As a result, most mining stocks have underperformed the market over the years. The catch is that mining companies don't know exactly how much is in a given deposit until it is all dug up. By keeping production costs low, a miner should be able to remain profitable during weak periods. These moves have saddled them with mounds of debt that they’ve struggled to pay off amid lower pricing for their products. In this view, the big risks and rewards mostly reside at the junior mining level. Juniors are riskier ventures, most likely found in commodity exploration, such as oil, minerals, and natural gas. It's able to keep costs down by operating large-scale, integrated mining assets. Shares of the copper and gold miner did about what you'd expect, given the background in the metals markets. See you at the top! For those who would prefer to get investing exposure to the greater mining sector (rather than pick individual stocks), there are several mining-related ETFs and mutual funds available that could be added to your portfolio. Although these two groups have a very different emphasis when they speak it, they are both right – mining is big business. When this happens, juniors can return more in a few days than a major will return in years. If you are looking for a lower-risk stock with the potential for dividends and some decent appreciation, then major mining stocks may be for you. The majors are well-capitalized companies with decades of history, world-spanning … The mining industry is both highly cyclical (it rises and falls with the overall economy) and capital-intensive, because mines are expensive to build. These stocks trend as the broader economy does, in both times of expansion and recessions. The second fate occurs when a junior has enough success to justify a major paying a decent. In 2016, the rare earth metals market was valued at USD9.0 billion and is expected to hit $20 billion by 2024, growing at a CAGR of 9.7% according to a report published by Global Markets Inc. A junior mining stock typically sees the most action leading up to, and immediately after, a feasibility study. If you are interested enough in mining to do some research, then there is probably room in your portfolio for both mining majors and juniors. That supports its production and cash flow so that BHP can return value to shareholders via dividends and share repurchases. Before you invest in the mining sector, you should probably know what greenfield exploration is, as well as how to estimate the impact of pricing risk and be able to hold forth on the dangers of buying on a single positive assay. Most common is a failure, which leaves a hole in everyone's pocket, including that of the banks and investors. Before you become a part of penny stock success stories, it is important to learn how to analyze mining penny stocks, or the companies that stand behind them specifically. And a strong balance sheet will provide it with the financial flexibility to weather an economic storm. In this sense, junior mining stocks form an exploration pipeline that feeds the major miners in the end. Hive Blockchain Technologies is a Canadian digital currency mining company that was launched in 2017 as a partnership between Foire Group and leading cloud mining services provider, Genesis Mining. Nov 6, 2020, Motley Fool Transcribing | It's also a leading copper producer. However, the opposite happens during an economic recession. Those factors provide the company with the financial flexibility to invest in high-return expansion projects throughout the commodity-price cycle. BHP Group complements its low-cost operations with a strong balance sheet, which it often bolsters via the sale of higher-cost mines. Rio Tinto is a U.K.-based multinational metals and mining company. The company typically operates fully integrated mining assets that extract ore and process it at hubs. Sean Williams | Nov 6, 2020, Motley Fool Transcribing | Nov 5, 2020, Rich Smith | Nov 1, 2020, Copyright, Trademark and Patent Information, Diversified mining as well as oil and gas production, Construction materials such as sand, crushed stone, and limestone, Energy materials including coal, oil sands (bitumen), and uranium, Fertilizers like boron, potash, and phosphate, Produces more than 500,000 ounces per year, Has at least 10 years of productive life remaining, Delivers total cash costs per ounce in the lower half of the industry cost curve.
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