 Good day fellow investors. Investing in junior gold miners. Or better to say investing in the Wild West. Every miner is different. There is no equal mine in the world. And every environment, every mining environment, every country, everything is different. This is what makes looking at such miners very, very interesting. And today I want to share with you 10 things that you have to keep an eye on when looking at the mining environment, especially at junior gold miners. How we'll do that? We'll analyze 10 different junior gold miners. And from the 10, from the discussion about the companies, we'll pick out interesting factors to look at. So, I'll first start with just a notion about the junior gold miner ETF, the Vanaq Vectors junior gold miners. What happened is that it became too big for its purpose. And it had to increase the minimum market capitalization of the stock it held. If you look at the top 10 holdings from March 2017, they are completely different now. That is because the limit was 2 billion market cap, now the limit is much higher. So, if you really want to invest in junior gold miners, the ETF is not that exposed anymore because it has changed its purpose. So, if you want to invest, you really need to dig into each one of those miners and see for yourself which one fits best your risk-reward appetite, because everyone is different. And we'll also learn what are the risks and rewards of investing in specific gold miners. Let's immediately start with the first example, Kirkland Lake Gold. For each company, we'll first look at the share price, how it moved in relation to the Vanaq junior gold miners ETF to see a little bit what was going on, and then we'll look at the company. So, for Kirkland Lake Gold, it outperformed significantly the gold ETF. Kirkland is up 40%, the gold ETF was down 11% in the last six months. So, now it's very interesting to see what made Kirkland move so positively in comparison to the rest, because if we can find such a pattern in other miners, we can expect potential upside. And what made the stock price move was that the company delivered on its potential. So, Kirkland has mined Fosterville in Australia, they found extremely high grades there, and the actual mining confirmed the grades. So, higher cash flows, higher production, everything was confirmed. The promises were confirmed. And that's what makes a gold miner move, when the promises are confirmed. Because, if I quote Mark Twain, a miner is a guy standing next to a hole in the ground and lying. So, miners always promise, always optimistic, always we have the best hole in the world, we have the best mine, because that's their job, they have to be like that. It's our job to see, are they lying or are they not lying? And the market usually waits for the promises to actually be confirmed by the market. So, if we can find a miner that has potential, that isn't lying, that has a high probability that he will confirm what's going on, then we have a potential winner. So, that's the first thing to look at when looking at gold miners. Is there potential to deliver on the promises? Because the delivering is what ticks the stock price significantly. Back to Kirkland, you can see how cost, mining cost went down due to the high grades. The high grades won't be there very long, it's important to check how long will that boom last. So, a long-term perspective has to be used, but we'll come to that later. The second miner I want to discuss is Alamos Gold. Alamos Gold is a producer that isn't profitable, but it is cash follow positive. This is because all in sustaining costs are above $1,000 per ounce. So, all the costs that it takes Alamos to dig out the gold from the ground are above $1,000 per ounce. Gold price is $1,25070, so the margins are not that big. However, if the margins are smaller, if gold prices increase, then Alamos will see a huge boom in margins. If gold prices decrease, Alamos will quickly become unprofitable. And if you check the stock market price in the last year, you can see how Alamos is much, much more volatile than the junior miner ETF. So, if when gold prices go up, Alamos shoots up. Well, gold prices go down, Alamos drops down like rock. Very interesting to follow. So, that's also the second thing to watch when analyzing junior gold miners, mining costs and expected future mining costs. Because the lower the margin, the higher is the volatility related to gold prices. The higher the margin, the more profitable the company is, the smaller is the volatility. We'll see it later with another miner. The second thing to watch is Alamos' 6th project that has the potential to double Alamos' gold production in the next few years. However, there is still a long way before the company delivers on those projects and as discussed before, the market rewards delivery, not promising. So, what's going on? The three projects most important for the company are in Turkey. And what's very interesting is that Alamos made a pre-feasibility study in 2012 and then again another one recently. And it increased the net present value 185% in comparison to 2012. So, the same ground, the same analysis, but suddenly everything, the value of the projects increased 185%. This is because Alamos says we'll mine it differently. We'll use new technologies and so on. And that's an inherent risk to junior gold miners. You never know how that technology, how that mining process will actually work on the ore body that is in the ground because that's always a risk. So, again, promises are one, actual delivery is something completely different. The third thing to watch when analyzing a miner is the mine life. How many years are there expected that the miner will continue to produce at a certain level with the reserves and resources it has in the ground? For example, here Alamos' reserve life index shows that Alamos has another 14 years of production. Other miners have more years, while many miners have very, very short production lives. So, if you invest, you might look, oh, look at the great fundamentals, but if those fundamentals are there only for the next two, three years, then it's easy that you can get toasted if the company doesn't invent something mute, which can be very costly. So, always look at the life of mine. I prefer miners with a very, very long mine life because those give me stability in a very volatile world. And if they have low debt, then they can survive even low commodity prices. If they have high debt, they're higher volatile, higher risk, higher reward. So, it's a question about what do you prefer? What are your personal risk reward preferences? Every miner is different, every person is different, me and you are different. So, the important thing is to know what you're doing and then decide based on your preferences. The first company we'll discuss today is B2G Gold, is B2Gold growth miner and expects to increase production in 2018 by 70%. The same as Alamos, you can see here that the volatility is much higher than the junior gold miner index, which means the margins will be tight. Let's see. This is the production plan and the production addition is expected to come from the Focola mine in Mali. Other mines are in Nicaragua for the company and even for the Focola mine, all in sustaining costs are expected to be around 900 on 1000. So, the margins are small. That's why the higher volatility. Nevertheless, the company is operating in Mali. In Mali, you have the northern Mali conflict, some kind of war there. So, it's very important to look at what can happen in the war environment in the countries when those miners operate, because those things can disrupt the actual mining operations. A new regime, a new government, nationalizations, those things can always happen. So, it's important to look at what's going on in the country, to assess the risk. If the miner is very cheap and if they lose even that production mine in a risky country and you say, okay, if they lose, doesn't change the value, the cash on the bank, they have usually in Canadian banks, then it's an interesting risk reward situation. So, always look at the risk reward. Never be focused on this is going to happen and this is terrible. Always, there is a potential that everything happens. So, and there is a potential that everything happens positively also. So, it's always risk reward with miners. The fifth thing to watch and again from B2Gold is, okay, if the fecal mine delivers, what are the fundamentals after that happen? The number of shares of B2Gold are now 965 million. If they deliver on their guidance, the revenue at these gold prices will be 1.1 billion. If they deliver on lowering all in sustaining mining costs to 100, then their margin will be around $450 per ounce. After taxes and interest costs, net profit 250 million divided by the 965 million shares, if there is more pollution next year, you get to a price earnings ratio of 10. And again, the issue is the fecal mine has only 7 years of production as is now. There is potential exploration. So, always a lot of things to watch, especially look at what will be the fundamentals, the valuations after everything goes well. Sometimes investors get so excited, push up the stock price, but then if you make the calculation, it's way overvalued already. So, also take care of that. All right, the fourth company we want to talk is Heckler Mining. And here you can see how the volatility of the company is much lower than the junior gold miner ETF. This is because Heckler's net profit margin of its revenue is almost 15% and operating cash flow margins are 37%. Those metrics are extremely high and the result of the low cost mines Heckler operates. If you want to low risk, then you go for the company that has the highest margin. If you checked our Norilsk video, Norilsk has a positive margin at whatever nickel prices. So, they make money constantly, whatever goes on in the world. But it's also less exposed to the upside because their margins won't increase that much if nickel prices shoot up. On top of it, Heckler is exposed to Canada, the US, very, very high margins. The silver margin is $17 per ounce, even if the price of silver is around something like that. So then they have a negative cost on mining silver from the buy products. Gold margin is not that high, but still relatively okay. Such good fundamentals lead to higher valuations. Heckler's price earnings ratio is around 21-22 while the price to cash flow is around 8-9. Now, the seventh thing to watch when analyzing junior gold miners and Heckler gives a perfect example are unionized strikes. Heckler has the lucky Friday mine and it's currently shut down due to a unionized strike. Such issues can severely impact the miner, especially in the short term because you have investments, you have expected cash flows, and if your miners are striking, you don't get those cash flows, which can be very, very negative for the credit structure of a miner. So important to keep an eye on what's going on. So unionized strikes, wars, how to keep an eye on that, read the local newspapers. I have a miner which I own, it's Nefsson Resources, it has a project in Serbia, the team of project, and I read local newspapers. Do I speak Serbian? Yes, very, very fluent. So I have that advantage. I see how is the population in the town of Bohr breeding about the mine. What is the prime minister saying? Because it gives me an indication about what can happen. A positive environment is very, very good. And it lowers the risks that something unexpected happens, like the unionized strike here. And we'll see many other issues that hit miners in the following companies analyze. Back to the lucky Friday. This is also an opportunity because now the stock price might be subdued because of the issues. But when those issues get resolved, then there is higher cash flows, higher potential, and it can be a positive for the stock. So again, high risk, high reward situations. What's Anna called is a low cost miner that's trading close to 52 weak lows. As you can see here, the company has really underperformed the junior miner ETF in the last three months. And what, why did they underperform? Again, as I was saying, because of political issues. So read the local newspapers, what's going on. And Osana Gold has seen its GDP on mining the Philippines shut down because of political, let's say, environmental reasons. Nevertheless, Osana is diversified across the world, many projects, developments, and so. But the Philippine government suspended the DDPO mine for environmental political reasons. So such suspensions when the government suspends are more risky than a union. You can talk to a union, you can discuss, you can increase wages and produce again. So increase a little bit your cost. You can work things out. But if the government says you are too dangerous, this is happening, the people that vote for them in that area are not satisfied, and the politician is at risk of losing his job, then he can suspend the mine permanently. And the outcome is never understood and never known. It can be a lengthy judicial process after it, high, high cost, and the company already invested so much in those projects. So there is a high risk of a big loss. That's why it's very important to keep an eye on those things. So that was the eighth thing to watch. Environmental, political issues, all those are combined corruption issues. So really try to understand the environment the miner is operating in and assess the risks in comparison to the reward and to the price you are paying. That's it. All right, next miner is First Majestic Silver Corporation, also part of the Gold Junior ETF, but it's predominantly a silver miner with all of its operations in Mexico. And if you see here, in the last year, it has terribly underperformed the Junior Miner's ETF. This is because, again, First Majestic had several issues at several plants with unionized workers. And the CEO said that the worker's satisfaction level at its mines is the lowest it has been in the company's 15-year history. So Heckler had one mine that was under a strike. First Majestic had three mines, illegal blockades, a lot of things going on there. So it's very important to understand what's going on and what's the outcome in the future. How will that evolve and what will be First Majestic's productions? So a lot of investigation, a lot of things to do before investing. However, the potential is high if those things get resolved. Seventh company Regis Resources, and you can see how the price followed the Junior Gold Miner ETF and then diverged in the last few months very, very positively. The fact is that Regis started to buy a dividend recently. A dividend tells you one thing. The company is profitable and produces cash, which is what you want to see. And this gives always a boom to the stock. Higher dividend stock goes up. If, God forbid, a miner cuts his dividend, then the stock drops like crazy. So again, watch the dividend and the potential that the miner delivers on the dividend or that it has to cut the dividend. That's terrible. Why did Regis perform so well? Well, they delivered on their promises, increased revenue, increased profits, increased earnings per share, increased EBITDA, and beat expectations. So again, the delivery is what comes to investing miners. The price to earnings ratio is now 15.3. The price to cash flow is 9.9. Thus, if you want quality and dividends, it certainly comes at a fair price. Nevertheless, Regis has also its risks and risks that fall from the sky. If you take a look at this picture here is a floating at Regis mine in 2014, which again shows what can happen to a miner. So you think everything is going well and then it starts raining and this happens. So this really disturbs the production and expectation of the cash flows, everything. And the stock price usually goes down. So that's also something to watch when investing in a miner. And that's not only rain, seismic activities, especially if you mine underground and the ground is shaking next to you. That's also very, very risky to do, a very risky business that can increase costs. God forbid there will be some accidents. But if you look at those things, you can lower your long-term risks and increase your rewards. Okay, pre-tune resources. That's a company that has no revenue. So it has a big project and we are explaining in this case how to watch net present values and project development. How does that work? So the 10th thing to watch are net present values. Pre-tune has high, high grade gold reserves, gold at 14, 16 grams per ton, which is very, very high at its Bruce Jack mine. The mine was commissioned in 2017 and it's expected to produce gold, to be producing gold now. As I said, the company had no revenues, but you see what does it mean to develop a project. If you look at the number of shares, in 2010 was 11 million, now it is 179. So there was a lot of delusion to develop the Bruce Jack project. And you can see the cap spending in total, they spent a lot, a lot of cash to develop that project. Nevertheless, the mine life is very long, 18 years, total gold production, 7.2 million ounces. There is exploration potential, high gold grace and average annual production 500 ounces for the first eight years. Now what I want to focus on, now what I want to focus on is the net present value. So you have three gold prices in this case, 800, 1100 and 1400. And you have a net present value here. It says at 5% discovery. Some miners use 5%, some eight, some 10. And that gives completely different net present values, especially in the long term. So it's very important to look at the discount rate. We're seeing the net present value of the miners. In this case, the net present value is 1 billion if gold prices are at 800, 2.3 billion if gold prices at 1100 and 3.6 billion at the higher gold price. With gold prices now at 1.2, the net present value will be around 3 billion. The market cap of the company is 1.73 billion, thus much lower than the actual net present value. Why is that? Because the company has two deliver on the project, we have to see now in the next few months how the Bruce Jack project actually delivers. Are the grades so high? Can they separate the gold at that high percentage, 90 higher percent? So many, many issues to check and to see what's going on. And if you like reading and see the sensitivity of the net present value, something you always need to read is the technical report on the project. Most miners publish their technical reports. Those are 400 page reports where they describe in detail everything about the project about a mine. So if you read that, you can see the sensitivities, the risks and then compare to your personal preferences. I always read the technical report before investing and we'll be analyzing some other mines and taking a lot of data from there. What you can see in the technical report are the expected cash flows on a certain gold price and you can see here how the plan was to invest 700 million in the first two years before the production. The plan was 700 million. However, the company invested 800 million so it went over budget. This immediately skews all the net present value calculations. So be careful about that. This is just a table from the technical report where we have the summary of the pretaxes, net present values, 5% discount rate. I prefer to use an 8-10% discount rate even in order to account for all the risks about all the things that can go wrong. And then when you compare it to the market cap, you see that the company is not that cheap. All right, number nine. Tahoe resources. The stock price dropped like a rock. This is because Tahoe resources had its main mine Escobar license suspended. The Guatemala Supreme Court issued the provisional decision to temporarily revoke the license of its flagship Escobar mine. So in order to understand that, you need to be a lawyer and you need to understand the Guatemalan court process. A good way to start is to go on the Tahoe investors relation page. They have a webcast where they explain what's going on. The first 10 minutes are from the CEO and there you can listen and learn about how that goes, how a company can get its main mine suspended. I think it's a very, very fishy situation there because why would they suspend something that has no relation with the extra reason? So perhaps it's some corruption. We don't know. We will see. However, if you want to invest in such companies, you have to know that you can lose a lot, but you can gain exponentially high returns. What's the problem with the suspension? Everything changes for a company. They don't get the cash flows from production. Thus, their capex is different. Their expected development is different. It can really disrupt the company depending on how long it will take to come back online. The 10th company I want to discuss is Endeavor Mining. So you can see outperformed the junior gold mining ETF and the outperformance comes because it's a really growth company and the company that grows production and lowers mining costs. So if they continue to deliver on that, they will soon hit 900 000 ounces of production per year. It's an African company. It has its mines and projects in Africa, Mali, Ghana, Ivory Coast. So a little bit more risky from a country perspective. Nevertheless, if we go back to the production, 900 000 ounces at an all-in sustaining cost of 800 will lead to profits of 405 million or four 4.2 dollars per share, which makes it very cheap in comparison to the current price of 19. So if they deliver on the project, they will certainly see higher prices. So to conclude, investing in miners really requires a lot of dedication and knowledge. You really need to look at every risk, every potential impact of the company, and then to also look at the things that can happen but are not foreseeable, like strikes, like mine suspensions, rainfall, waterfall, seismic activity, all those kinds of things make investing in mining very, very risky. However, if you dare to invest in such things, if you do your due diligence very well, the rewards are exponentially higher than the risks. All you can do is what you invested. However, you can easily make 10 times your money with a miner. That's what makes them very attractive. And especially, it's okay to keep a small part of your portfolio in such investments. I hope you like these 10 things to look at the analysis of the 10 miners. Click like if you enjoyed. If you haven't already, don't forget to subscribe to get more analysis of miners in your feed. We'll be analyzing in detail many miners in the future because I still think that the commodity environment is cheap and expected to boom in the next few years. So there is a lot of potential to gain with miners. So the trend is positive. And now we have to find the best miner to take advantage of that trend at a low cost. Thank you for watching. Leave your comments below and I'll see you in the next video.