Why Near Production Junior Gold Miners?

I have been an investor for more than 20 years. For the past 12 years I have earned an annual average return of 35% using a top-down/bottom up, sector rotation approach.

About 60% of my portfolio holdings are now in junior gold miners that are nearing production. What I like about companies at this stage is that they either have or are about to have the resource and infrastructure in place. Now all they have to do is execute according to plan, which can be difficult at times. Going from zero production to millions of dollars in cash flow in the space of a few months can be very profitable for investors. Many of these companies are not on the radar of most investors and have market caps under $100 million. Once these companies begin production, they will be generating positive cash flow and should eventually be recognized by the market with higher share prices.

Junior gold miners in the pre-production phase can also be a hedge against a falling gold price. Though, current trends indicate a rising price of gold in the near future.

Mining is a risky business. A lot can go wrong. But the reward to risk ratio is better than any other investment subsector right now, in my opinion.

I own the following junior gold miners in order of portfolio weighting.

Metanor Resources (25%)
Jaguar Mining (16%)
Gold-Ore Resources (4%)
San Gold Resources (4%)
European Minerals Inc. Warrants (3%)
Minefinders (2%)
Nevsun Resources (2%)
Gold Queen Mining Inc. (2%)

I will be posting my analysis of these companies over the next days and weeks and welcome any comments or questions.

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