resource sector punts

Lot of good stuff being published over the past week or two (Marcus Padley and so on) but I wonder how many following the comments being made.

1. Management. A good track record in the mining industry or merely associated with a few good promotes over the past 18 months? As an aside, I look for a board with experience and one where the explorationists are kept under a tight monetary hold. The average geo is crud at budgeting (particularly corporately!) with one or two exceptions.

2.Cash is King. Nice saying but should be expanded to read positive cash flow operations (most gold projects are still pretty average, even in this market), bankable developments underway (and I mean what is trully bankable, not resource in the ground-hint look at potentially where the project will stand in the cost curve for that commodity), and/or exploration projects that can be serviced by cash in the bank for a fair while yet-12 months with a market cap that appreciates the risks involved. Nearology is not a prime indicator as to ultimate value.

3. Commodity Outlook. If you are backing uranium or nickel this week, good luck. Outlook's change, they always do, but those two suck for the time being (six months plus). As a further aside, avoid companies whose focus has changed twice or more in the past two years without a commensurate change in board composition. There is a small rider here-gold ground can also be prospective for nickel (eg south of Kalgoorlie) but rarely do you get the trifecta, uranium as well! And if it is in WA or QLD forget uranium anyway.

4. Some of the Other Variables. A remote location has an added layer of infrastructure costs-these have a heavy bearing on bankability. A gold project 2 kms from Kaldoorlie is infintely better than one 500kms further out into the desert. The differences are not marginal.

Servicing projects in Sth America comes with an enormous bill for airfares.

You want staff in one of the 'stans, ehiopia and other parts of the black continent, armenia, greenland and so on ? Firstly they will want double the pay plus, and secondly, they will rarely be any good!

Bankability in Fiji no longer means an island paradise. It is currently off limits to most banks.

The above is somewhat warm and fuzzy. Personally have a healthy balance between spec and blue chip. BHP and RIO lead the pack, but I use these as a rough benchmark for the rest. How much risk will I entertain bearing in mind the potential return once I have had a go at the above matrix.

I have seen a few decades and am still around to enjoy the profits available in this current market. Personally reckon BHP results will be a corker this week, and it may take a week or two, but the positive effects should be felt in the market by mid September. October is another question!LOL

Cheers,TAS