cheap ugg slippers What if you were streaming your favourite business news program on the internet and you saw an accredited geologist telling the audience about the discovery of a fantastic new gold deposit, and the best part was that it is still not widely publicised. This new gold deposit has a size so massive that the initial estimates are indicating that there is probably at least 7,000 tons of gold buried deep within the earth, and the best part is that a certain mining company owns the rights to all of the gold in this deposit. Wouldn't you be dying to know the stock symbol of this company so that you can invest in this lucrative proposition?

STOP. This is a very common mistake that many investors make; just because a mining company has the mining rights to a large ore body does not necessarily mean that this miner will be a suitable and profitable investment for your portfolio. There are a multitude of other factors that must first be considered when investing a mining company. Let's imagine for a moment that this newly discovered ore body is located on a Native reserve that is adjacent to a popular national park in British Columbia that is frequented by many tourists annually, what would this mean for the mining company? The jurisdiction in which an ore body is located is just as important as the grade of the ore body, because extraction of the natural resource could take decades, and this would very quickly eat into the company's capital and potential earnings, eventually leading to bankruptcy of the mining company. Stock promoters very rarely talk about the challenges posed by the jurisdiction of a find, and this is something that every astute mining investor should consider when researching an investment.

ugg bailey button In addition to attaining the necessary permits to harvest a lucrative resource, the mining company would also need to ensure that they have accessible infrastructure such as roads, and railway links, to ship the product and heavy equipment. Water would also be needed to build the mine, and a steady supply of electricity is required for mine operations. Did you know that it can cost up to $1 million dollars per kilometer of roadway constructed in the rugged Canadian wilderness? These are some of the difficult challenges associated with ore bodies that are situated in remote locations.

Now what if this ore body was not located in British Columbia, but rather in a politically unstable jurisdiction? Then we just opened up a whole other can of worms when it comes to what can happen when mining in these regions of the world. There are many bargains available in junior mining stocks right now, but in order to find that investment that will reward you a thousand fold, it is very important to have a thoroughly structured approach to mining investment that considers all of the necessary factors.

These factors are:

a) Evaluation of the primary target commodity

b) Stage of mining project

c) Understanding and evaluation of the quality of the underlying asset base

d) Evaluation of the management team

e) Determining the company's financial position

f) Valuation

g) Promotion

h) Understanding near term catalysts

A detailed explanation of these factors is beyond the scope of this article. To learn about these factors in more detail, read this book which is an international best-seller and the definitive guide to successfully investing in the extractive resource industry.

ugg bailey bow Ashbee A. Bakht is an international best-selling author who holds a degree in psychology from Brock University, Canada and he attained his postgraduate education in minerals and mining at the prestigious Norman B. Keevil Institute of Mining Engineering, at the University of British Columbia, Canada. As a professional commodities trader and arbitrage specialist, Ashbee's strength can be found in taking positions based on economic forecasts of trends and seeking out arbitrage opportunities. Ashbee specializes in trading crude oil, gold, silver, and other base metals.