Is BRB a good investment?, page-2

There are several answers to that question, I think, and experienced investors in mining companies may wish to comment as well.

Mining companies are very different from companies in the industrial/financial/service sectors. Until a feasibility study of some form is produced, you have to guess at any ROI and even then it is still at estimation level.

a) something like 14 out of 15 early stage exploration companies fail.
b) if an explorer strikes a big discovery then the SP can go up multiples of your investment very quickly but they may have languished for years beforehand. Look at DEG, CHN, RXL, MGV for very recent examples of this.
c) high amounts of capital are needed to develop a mine and a processing plant to produce a saleable product (ore concentrate or refined metal)
d) risk of failure is high but the reward with success is high as well
e) best to spread your investment across several companies to allow for some failures.
f) invest small at the early stage but add more as the company progresses and proves resources and reduces risk.
g) even companies with proven reserves which are producing can go bust or come a cropper - witness GCY, MOY, DCN, as recent examples
f) how long to go into production? When do you start the clock? Often an exploration company has been private for some time before listing on the ASX and it can take years more before it starts producing. BRB is part way down this timeframe.
g) there is an expected process for a company to follow before investors, banks etc will front up with funds to facilatate the building of a mine and processing plant. Plus all the mining, aboriginal and environmental consents needed. It takes several years for all of this. Since it may take $500M to put it all together then it is understandable that the funders want to reduce risk as much as possible.
h) BRB has still not produced a feasibility study, one of the first things required before funding initiatives are engaged. In other words, BRB is still at the exploration stage and has not yet entered into the development stage.