Thinking of investing in a mining company?
Before making such a decision, you need to understand the nature of the mining industry, and the related risks.
The mining industry is known to be cyclical. The risks are high, but good returns can be achieved. As an investor, you could generate substantial gains if the company mines its deposit or if it is acquired by another company. However, depending on how the project takes shape and economic conditions, you could also lose part or all of your investment.
The research and activities to be carried out from the discovery of a deposit to mining operations take a long time and cost a lot of money. Even if the initial samples (the "mineral occurrences") are promising, a mining company has to conduct extensive assessment work to determine whether mining operations are feasible.
Of the new deposits that are discovered, very few are actually mined. In many cases, the assessments show that mining would not be profitable. In those cases where profitability is demonstrated, more than 10 years can easily elapse between the initial discovery and mining operations.
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