×

The 3 People Every Junior Mining Company Needs on Their Management Team

March 1 2021, 14:15 GMT
Contents

Most junior mining companies will fail, and the success of a mining company is largely dependent on the management team. A strong team with focus and a solid business plan is set up for success. Strong management teams communicate clearly with investors and are focused on future profitability. 

As an investor, you want to make sure a company’s management team is competent before making investment choices. But what defines a good management team? Below, we’ve identified the three key players every junior mining management team needs to be successful. 

Team members with relevant experience

s

In order for a junior mining company to be successful, the management team must have relevant experience. Relevant experience is experience directly related to the junior’s project. 

Understand what the company’s goals are - are they exploring for undiscovered deposits, or are they acquiring an existing project or mine - and make sure the team members’ experience is the right fit. A good team is well-rounded, with the necessary geologic, engineering, financial and legal talents. 

Look for:

1. Relevant jurisdictional experience

Teams who are familiar with local permitting, infrastructure and community relations are more likely to be successful.

2. Relevant geological experience

Teams who have previous experience with the commodity can determine if the resource is present and if it can be economically extracted. 

3. Relevant engineering experience

Teams who have experience operating a similar mine will be able to keep the project on track and address any engineering or operational issues. 

4. Connections

Teams who have experience with their commodity will have connections with potential financiers and business partners. 

Avoid: 

1. Management teams who have no experience in the mining industry!

It may sound stupid, but in the last bull market there were several that came through the door. Expect more this time around.

2. Team members who don’t have experience with juniors.

The budgets and operations of a major mining company are different from those of a junior. Often useful as NEDs, big company execs often do not necessarily work well as managers of junior companies. It takes years to reprogramme someone!

3. Teams who only have exploration experience and no experience opening a mine.

Fine for exploration, but not for building a mine.

Team members with previous success

The 3 People Every Junior Mining Company Needs on Their Management Team

Investing in a company who has never opened a mine or provided returns for shareholders is a huge risk, if the company is attempting to open a mine. Management teams who have been successful in the past are far more likely to do it again. Companies who have successfully opened mines and funded projects in the past, even in challenging markets, are set up for success. 

Look for:

1. Team members who have opened a mine

Companies who have the technical, financial and operational experience of opening a mine are far more likely to successfully open another mine. 

2. Team members who have successfully exited

The goal of most juniors is to develop a property, open a mine and sell it. Companies who have done this one are well-equipped to do it again. 

3. Team members who deliver on promises to investors

Companies who have a history of delivering results to shareholders on time will likely continue to meet expectations. This is KEY, and it is called integrity. It works for exploration companies through to production companies, but avoid an exploration guy trying to carry over a track record of delivery in his core skill set to a new area such as production or development. 

4. Team members focused on future profitability

Management teams should focus on continuing to secure financing, managing expenses and generating profits for shareholders. These are the commercial brains in the group - very important!

5. Transparency

Good companies will be transparent with their financial records and honest with shareholders.  

Avoid:

1. Management teams with no prior success building and/or selling a mine.

2. Team members - especially CEOs - with bad reputations.

Avoid teams with excessively high salaries and expenses, and teams who lack integrity. It may sound obvious, but it is important.

3. Companies without a business plan or focus.

A management team who is developing multiple, unrelated assets or has too many assets will have difficulty opening a mine and delivering results to shareholders. 

Team members with a stake in the company 

h

It’s a good sign when at least some of the management team owns a large stake of the company. When team members have ‘skin in the game’, the company’s outcome directly affects them. 

During the exploration phase, it is critical for some or all of the management to have a stake in the company, so the company can grow and attract institutional and retail investors. Management ownership shows that the team believes the project will be successful. 

Look for:

1. Teams with vested interest in the company.

They are more likely to make good decisions for the company and thus, good decisions for shareholders. 

2. Teams who use shareholder money responsibly.

When the management team’s money is at stake, they are more likely to use the money responsibly by growing the company and getting work done. 

Avoid:

1. Team members who only have stock options.

Options can be re-priced and it won’t affect the team if the share structure is diluted. 

2. No management ownership in the company. 

How to evaluate a management team

Now that you know who to look for on a junior mining company’s management team, how do you evaluate the team members? First, research the team members’ backgrounds. Read about their previous work experience to understand if it’s relevant, particularly to a junior miner. Look for experience opening a mine, working with similar ore deposits/commodities, and in similar jurisdictions.

Next, research team members’ previous companies. Did their companies deliver results to shareholders? Did they follow through on promises? Look for companies with a proven track record of honesty and success.

Strong management teams are well-rounded, experienced, and focused. They work together to build mines and provide returns for shareholders. Success depends on the management team, so don’t make an investment decision without reviewing the management team first. 

For more investing commentary, analysis and opinions like this, click here to join the waitlist to our private investor platform specifically for retail investors. Here's what you can expect:

  • Club TV: Netflix of mining. Complete interview library of 350+ companies. Filterable by exchange & commodity.
  • Community: Online/mobile social network. The most generous, sensible and respectful group you’ll be proud to be a part of.
  • Company Reports: Career miners & financiers condense weeks of research into simple Red Flags & Green Lights®. Bonus, access full backlog.
  • Behind The Screens: The 30% of companies that could make you money, identified. 3-mins or less. Candid summary. Bonus, access full archive.
  • 48Hr Early Access: Every company interview. Claim your head-start back from the institutional investors.
  • Exclusive Macro Insights: The brightest minds in Uranium, Nickel, Coal, Royalties & Lithium - weekly.

Join the Club  


Club Waitlist CTA
Share this article
cruxLogo

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

Crux Investor does not verify information provided by contributors or video interviewees on this site, and makes no assurance as to the adequacy, completeness or accuracy of any such information. Crux Investor steadfastly disclaims any liability or responsibility for the outcome of any investments made by users of this site or our branded affiliates. Users of this site (and our branded affiliates) should consult with their own financial advisors to assist them in making investment decisions. By accessing this site and our branded affiliates, you agree to the terms of service and privacy policy.