Another important issue is whether the property or project they develop has any potential. Of course, you are likely to get estimates and there is no guarantee that the actual quantities of silver will match these. It is possible that the management, financial controllers, and geologists promise more as to attract investors. While potential is one thing, especially on paper, exploration is not always feasible. For example, the infrastructure costs may be too high or the region may be hard to access, even though the drill results are decent. Senior mining companies are different in that. Senior miners are more experienced, larger mining companies that own and run existing mines. With mining sites already generating profits, investors find it easier to evaluate the company’s profitability.
This comes with fewer surprises and a degree of consistency when it comes to stock prices. Junior mining companies, on the other hand, have to identify different mining sites and explore their potential. There is always a risk that exploration will not result in actual discovery. This may be a costly initiative for junior mining sites and their investors. Many junior miners sell their sites to established mining companies to ensure better returns after they begin exploitation. However, if the miner does not have funds to even start exploitation, this signals financial losses to follow.
If investing in senior and junior silver miners, you should know what these types of miners have to offer in terms of value and risk. In the area of senior mining, investors can look at income statements and balance sheets and make a fairly good judgment about the company’s value. The situation is different with junior miners where buying silver stock requires looking at charts, the company’s properties, getting to know the management body, and so on. In many of these cases, there is no way of knowing whether a junior miner will make a discovery or not. Some investors just rely on their intuition, but experts recommend gathering as much information as possible. For example, it is good to know that the management body has performed well in exploration or the small mining field. Another indicator of a sound company is if its management had run or discovered a profitable mining site in the past. Naturally, investors also want to look at the cash balance and cash flow of junior mining companies. Although some companies may have developed good projects, high burn rate means that they will have to close operations in a couple of months. Unless they find additional financing, this is a likely scenario. The management should be able to respond on the question of how long they can continue operations if things do not go according to plan.