PART 4
FUNDAMENTAL INVESTING IN DIAMOND SECURITIES:
Several factors determine price movement within a specific market.,
the least of which the individual investor tries to figure out on a daily
basis. Questions pertaining to Why does the market react the way
it does to news is at times baffling to say the least. So a strong fundamental approach is in order when dealing with these issues.
Understanding global movements in the backdrop of niche markets
is challenging to say the least.
When dealing with purely speculative issues., the more questions
the investors ask the better he is prepared to withstand the ups and
downs in those issues.
Here are some key points which should be assimilated concerning
these issues.
Foremost investigate the Geology thouroughly.
Diligence is dictated not only by the Geology but who is the company
relying upon to deliver those results.
1. Couple good Geology
2. Strong technical expertise
3. Ability to raise financing
The next approach is to use follow the money approach. Study the
players., have they delivered in the past.? If so., what makes you think they will perform this time around.
With this in mind. When conducting due Diligence expect some hype
expect promotion but search the players thoroughly.
The General Tips concern exploration companies concerning press
releases should be asked when evaluating releases.
1. When kimberlite cores are reported ask these questions.
a. Was the intersection continuous and uniform., did the core
drill end in kimberlite. These are key questions which may indicate
the early direction of the program.
b. Were visible diamonds observed in the core., a good early
indicator of high diamond counts
c. Ask for the total drill intersepts and drill spacings.
2. Most kimberlite is visibible in the core., depending whether those
companies are juniors or mid-juniors may result in the answers you get.
3, Make a mental note of events as they unfold. Knowing the geology
of the neighbor may help in determing the chances of similiar geologic models., but not always.
4. Judge the companys credibility., whether they are aligned with known experts in the business or are shell plays looking to turn paper.
5. Study the trading patterns and question the company if things cant
be explained.
6. Seasonal tendencies occurr with all issues., whether they be S.
African., NWT., or down under.
7. Garner opinions thru several sources in the business to make final
decisions.
8. Learn to understand the cyclical nature of the business
9. Best of all understand the risk reward scenarios and that can only
be accomplished thru watching the industry and getting a feel for
the money movers.
10. If the geology is outstanding., most exploration programs will evolve with drilling over several years., so it pays to follow the story.
EOM PART 4 |
