Smart investors always do their own due diligence before investing. Although the junior resource industry is often thought of as "speculative", that does not excuse investors from performing thorough due diligence prior to buying a stock.
Today, investors have a variety of web-based tools that help them to perform in-depth analysis quickly before making a buying or selling decision. One such tool that is unique in the marketplace and provides some interesting possibilities for investors is MineSnooper.
At the recent Hard Assets Investment Conference in New York, we spoke to David O'Brien, president of International Mining Research (the company that runs MineSnooper). We wanted to know more about MineSnooper, how it got started, and how investors can use it.
Mr. O'Brien started by telling us how it all started: "The original website we did was a BritishColumbiaGold.com," he said. BritishColumbiaGold aggregated information from their clients and posted it all on one site. "At first, it was a bunch of competitors all on one site. It seemed a little counter-intuitive but it provided a bit of branding for some explorationists who really didn't have the money to do marketing. They were too busy putting money into the ground [to spend it on marketing]."
Along with providing investors a convenient location to find information, there was another benefit as well: "We ended up with leverage at events or in the media where we'd buy advertising," explained Mr. O'Brien. "We got [media] discounts. Then we promoted the media, we promoted the events, and we got even more discounts. That meant that our clients on BritishColumbiaGold.com were getting much more exposure for their dollar. It was a media leverage concept."
Sensing the potential, International Mining Research started branching out. "Soon after that, we did NevadaGoldTrends then OntarioMiningCamps, proving that it could work in any given region." Building on the concept and growing the idea even bigger (while incorporating more technology) led to the site they have today – MineSnooper.com. "It's Google Map-based engine. It's a reverse search: You don't have to know the company name or the project or the principals. You just look for "silver in Mexico" or "gold in British Columbia" and up comes those properties if they're listed on MineSnooper."
At the time of this writing, MineSnooper has dozens of mining companies listed in Canada, United States, and Mexico, and in Africa's Mozambique, Tanzania, and South Africa.
MineSnooper's easy-to-use search tools help investors zoom in on mining jurisdictions or resource-types that interest them. Mr. O'Brien said: "You're already ahead of the game in that you'll find some places you want to invest and a resource you like. So now that company has to have something wrong with it for you to decide not to buy. MineSnooper has become a search engine for investors who want to do their own due diligence after finding something that meets their investment criteria."
The companies represented on MineSnooper are also winning with this concept. "The media leverage is even greater as we now attend over 40 event dates every year. We're partners with media around the world," added Mr. O'Brien. "MineSnooper has partnered with event companies, like Hard Assets Investment Conference, Mines and Money Shows, the Cambridge Shows, and various others, to promote those events to investors and media and clients. So that exposure for more exhibitors and more attendees meant that we can secure table space at those events for much less than retail, which gives our clients exposure."
International Mining Research has expanded in other ways, too. "We've also been submitting articles about our clients to various media. Our first article and was selected as a cover story. Our other clients found out about that and wanted us to write a cover story for them, too. So we've had 16 cover stories in a row, and 40 other articles as well. And, the MineSnooper model is probably going to be duplicatable in other industries. What's coming out [next] is PowerSnooper – a website using Google Map's reverse search – for people looking for "wind in California" or "solar in Brazil", and so on."
So, how can junior resource investors use MineSnooper as part of their due diligence? Here's a paraphrase of what Mr. O'Brien recommends – and he points out that it will be a slightly different checklist if investors are looking at explorationists, developers, or producers.
1. Investors can identify a mining jurisdiction that interests them and see what companies are in the area. Then look at those companies and see which ones are worth investing in. This is ideal for an investor who wants to find one company in a specific jurisdiction or who wants to make multiple investments in a jurisdiction.
2. Investors can identify a company that interests them and see what other companies exist in the same jurisdiction.
3. Investors can identify a specific resource and see which companies are working in that resource, either to identify mining hotspots or to work with a globally diversified range of companies.
Once an investor has chosen a few companies, they can go deeper to learn more about the company. Lastly, Mr. O'Brien suggested investing in 5 or 6 companies to start but to continue looking at those companies even after they are in an investor's portfolio.
Smart investors always do due diligence before investing, and their research in a company doesn’t stop once they own that company's shares. MineSnooper is a useful tool for today's web-savvy investor.
Top things an investor should look for when evaluating a target.
The main checklist will be slightly different for an explorer, developer or producer.
· Macro-level information
· Micro-level information
· The region or jurisdiction
· The resource
· The management team: Are they experienced? Are they doing what they said they are going to do?
· What are the next things I need to do, buy more stock or sell some off?
There is no easy checklist. It can be summed up in the title of Napoleon Hill's book: "Think… And Grow Rich".
Investors should put together their own list.
David O'Brien (BA Hon)
604 987 6657