education 505 - excerpts from a power investor, page-5

Thermionic,
agreed. The junior sector is much more difficult to value and it takes a lot of experience and knowledge to be able to do that. Of course, one will not be able to obtain an exact valuation but with a sound backing of mining knowledge, one will be able to interpret all the information that the management has released [i.e. geotechnical, geochemical and geological interpretations].

My purpose to dispense technical knowledge [in my posts] these past couple of weeks is to arm potential investors in their future purchases in ALL junior plays. Most answers actually lie within the announcements and geological models. If one understands and is able to read in between the lines, one will be able to see value and additionally pick out any red flags that might present itself.

In my opinion, there are only a handful of companies trading at a discount to their underlying value and place in the discovery cycle on the ASX. With the current volatility, investors will definitely be able to take the opportunity.

The information that management will not be able to spruik will be the technical information. Grades, cutoffs, stripping ratios, metallurgy etc...these details in itself will give knowledgeable investors the relevant information to work things out.

In relation to OVR, most of the relevant information is out in the open. We have the stripping ratios, cutoffs, grades, NPVs, IRRs, spacing of the holes, tonnage, gradients of the deposits, community sentiment, government participation, royalty rates etc. We also had 3 studies [i.e. scoping and pre-feasibility studies] done that indicate an economically feasible and lucrative mining operation. The recommendation to complete a Definitive [Bankable] feasibility study is the clearest indicator that the management are going to increase shareholder value and perhaps entice a takeover. Out of all my junior plays, there is only one junior that did not get taken over post DFS. Nearly all juniors have this goal in mind; that is to be bought out. If they go to production, they will also be rerated immediately.

One indicator [for me] is management's skin in the game. The fact that the management have held their holdings since 100cps through to 5.5cps and now to 27cps indicates that they too share a higher Net Asset Value for the company. They do not get paid much at all and as such their cash burn rate is low. They are banking on a takeover as they get their underlying value higher and mining permits...i can assure you on that.

The Yukon is the most watched province at the moment with numerous takeovers in the last 2 years and i believe with patience, shareholders will be rewarded.