Which part of the chart do you think we're at?
https://www.moneymanagement.com.au/analysis/investment-management/2012/commodity-investors-hit-a-rocky-patch
excerpts
Think small. By far, the greatest opportunities lie in the many exploration and development companies – for those that do their homework. Knowledge of the geology, mineability, and metallurgy of the deposit is required. The history and track record of the asset and management is also important.
Momentum investors come into the stock primarily seeking the eureka effect that follows good exploration results. Frequently, these speculators exit their stock positions when the hard yards commence (pre-feasibility study and financing) – causing the share price to peak.
The subsequent dip is called the ‘value valley’. The valley is longer for bulks/energy (infrastructure) and shorter for precious metals.
For a professional investor, on average, the best risk adjusted return usually comes post the release of the pre-feasibility study. This outline (but quite detailed study) can provide enough information for a sector specialist to perform a SWOT and valuation scenario analysis.
This may be 1-3 years prior to production commencing, depending on the project’s infrastructure needs and the specific Government approval process.
Given the restrictive nature of the domestic funds – which often cannot invest in pre-producing companies – investing at this point in time also provides a window of opportunity before the ‘big money’ can begin to follow the stock, led initially by active super funds and followed by passive funds as the increasing market cap propels the stock into a new index.
Seek out takeover targets. Mergers and acquisitions remain one of the best investable themes in mining. The world’s major primary commodity consuming nations (such as China, India, Korea, and Japan) all have dominant industries which have critical supply needs that cannot be met domestically.
