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A Mining Company for the Smart Money

Jeff Nielson
|
Tuesday, May 30th
Mining investors are shrewd buyers. These metals hounds shop around for projects with high grades, a robust resource, and strong management. Ideally, they would also like projects situated in favorable geography with abundant infrastructure.

The goal for these investors is to buy into a project (and company) at an early stage, with the goal – and hope – that the project will eventually become a highly profitable mining operation. Why not just buy shares in an established producer with high grades, strong management, excellent infrastructure, and which is also highly profitable?

Simple. Everyone wants to hold shares in such companies because they represent minimal risk. As a result, these established companies generally tend to be fully valued, providing little profit-making opportunity for investors.

However, this is not always the case. There is one investment window where investors have an opportunity to buy into the best producing miners, minimizing investment risk, while still having the potential for significant share price appreciation.

Mining is a cyclical industry. Look to buy into established producers with the best projects at the top of the market and investors know they will have to pay top-dollar for those coveted shares. But buy into the same mining company at the bottom of the cycle and these same shares are on sale.

Silvercorp Metals Inc. (TSX: SVM, NYSE MKT: SVM, Forum) is currently on sale.


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