Tips to avoid blowing your dough in mining stocks

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Spectacular fortunes have been made from mining. Australia’s two wealthiest individuals, Gina Rinehart and Andrew “Twiggy” Forrest have a combined wealth of more than $50 billion, amassed from their ownership of vast expanses of commodity-rich dirt.

It’s also worth noting that, in the global context, the ASX is home to very few industry-leading companies, with the exception of BHP Group and RIO Tinto.

So, it should come as no surprise that there are a disproportionately large number of aspiring miners listed on the ASX. With these companies also comes an avid pool of investors keen to take a punt on what they reckon will be the next big thing.

You know the drill—last year, it was lithium; this year, it’s uranium. Get in early, and you could be rubbing shoulders with Gina and Twiggy.

But where the money flows the sharks also circle. This is true of all industries and the mining sector has had its fair share of spectacular flameouts. You’d think the days of Bre-X were behind us but earlier this month a Canadian miner came clean to investors after discovering a rogue CEO had been manipulating assays of drill results. Needless to say, the market did not respond well with shares falling over 50% on the news.

Mining is a sector many Livewire readers have on their radar; however, it tends to receive less coverage from professional money managers who regularly contribute their insights to Livewire. So when the crew at Money of Mine got in touch ahead of their recent Sydney visit, it was an excellent opportunity to dig deeper into the sector.

For those not familiar, Money of Mine is a daily mining podcast run out of Perth and hosted by three mining tragics. Don’t be deceived by their larrikin image, Matt, Travis, and Jonas are passionate, switched on and knowledgeable about the mining industry.

While in Sydney, I hosted a chat with the Money Miners to help Livewire readers identify red flags in resource stocks and learn about the ingredients the crew looks for when scouring the market for investment ideas.

Time codes

0:00 - Introducing the Money Miners
4:03 - Lessons from 12 months analysing mining stocks
12:39 - Explorer, Developer or Producer?
20:07 - The most important ingredient when picking a mining stock
22:56 - Which commodities look underrated?
29:17 - The best emerging mining operators
31:46 - Fund managers that impressed the Money Miners
36:15 - What’s next for Money of Mine