BLG has all the traits of a junior mining company that has discovered the 127 element on the periodic table.
Hints of the material abound.
The element has traits and properties of most of the best elements combined. Because it is so new and so little known about it, very difficult to extract. In fact most mining equipment needs to be modified even to get it out the ground.
How much is there? A lot! What is it worth? Heaps!
Junior miners do have the JORC. Not so in the tech space.
Other common traits are: junior miners are burning matches, constantly running out of cash.
Before they make an actual discovery, most junior miners aren't "worth" anything. They don't have any earnings. They don't own any land (they usually lease it, so their land is actually an expense)... Even the cash they might have in the bank is emptying out like water through a sieve as they spend money to explore.
At this stage, investors risk being "diluted" to death. If a junior burns through money with nothing to show for it, it can sell millions of dollars worth of new shares. That dilution is like inflation. The more new shares sold, the less the old ones are worth. These slow deaths happen much more often than fast gains in the resource sect
Sounding a bit familiar? === So what makes a stock a "junior miner"? (..or a BLG?)
In a pure sense, junior mining companies have market caps somewhere between $5 million and $100 million. (BLG =$48m)
But here's the thing the makes them not for the faint of heart.
Usually, junior miners don't make any money. They just raise money from investors to explore properties for gold, silver, base metals, oil, gas, potash, or uranium, just to name a few.
And even if they make a significant find, junior miners rarely develop it themselves. Instead they sell the project to a major miner, who can more easily raise the required funding and has the experience to build and operate a mine.
When it comes to junior mining stocks, management is the key.
It is so important that many times a less-than-stellar property can be made viable simply by a great management team that has the ability to prove its deposits are economically attractive, or even potentially very profitable.
Investors need to be sure the guys running the junior miner have a ton of experience, ideally directly related to the same commodity involved in the project at hand.
Even better is when management and/or the company's geologists have made significant discoveries in the past, and some of those deposits have made it all the way to becoming mines.
Experienced management will also know how to navigate the legal, political, and financial issues sure to arise.
Look for companies where the key people have plenty of "skin in the game," ensuring their shares and stock options align their interests with those of shareholders. ====== I think the analogy is valid, perhaps may also be compared with biotech, but without a formal pass/fail exam at the end. Instead BLG turns up in the market, product in hand to listen to the applause...or crickets.
How are they hanging for you? Anyone from the IPO brave enough to admit they are still holding?
BLG Price at posting:
16.0¢ Sentiment: None Disclosure: Held
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