Junior mining companies, defined as small companies that explore new mines for new deposits, are known for their volatility. Though they are highly risky, they can also give you the best potential reward if you play your cards right.
While conservative investors might shun these stocks, it is not a bad idea to have some speculative plays in a well-diversified portfolio in order to give yourself an opportunity to gain huge rewards. For 2015, Fortune.com recommends buying mining stocks because of the low expectations in the industry, hence having the potential to yield better returns over time.
Here are some of the junior mining companies with promising fundamentals that can be considered "safe" bets for your portfolio, as far as penny stocks are concerned.
Rio Alto Mining Ltd. (TSX: RIO)
Trading on the Canadian Exchange, Rio Alto Mining conducts exploration activities for gold oxide, copper, gold sulfide, and silver. This established company is based in Latin America, and its biggest interest is in Lima, Peru.
In 2012, Rio Alto reached $6 per share, but it is currently trading under $3 per share –Â a total bargain. Being an established company with high trading volumes, Rio Alto has the potential for 1,000 percent gains. However, you might need to stay long with this stock if the metals and mining industries continue to struggle. It is best suited for a medium-term portfolio.
B2Gold Corporation (NYSE: BTG)
B2Gold, a gold, silver, and copper explorer, conducts activities in the Philippines, Nicaragua, Burkina Faso, Columbia and Namibia. Thought the African mines present a geopolitical risk, the Nicaraguan exploration activities are the most promising.
In the past, it has traded above $4 per share on the New York Stock Exchange, although it now trades under $1.80 per share. B2Gold is less volatile compared to other junior mining stocks, making it a relatively safe junior mining stock to own. Furthermore, the widespread exploration activities makes it a bit diversified, increasing its chances of hitting gold in at least one of its operations.
Amur Minerals Corporation (AIM: AMC)
Amur Minerals is a Russian mining company focusing on explorations for nickel sulfide, copper and PGM. Its flagship project, the Kun-Manie Project operating in the Russian Far East, is estimated to have 39.2 million tons of nickel ore, 80 percent of which is mineable. Alongside nickel deposits are deposits of platinum and palladium, by-products of nickel mineralization.
Just recently, the mining license of Amur Minerals for the Kun-Mani Project has been approved by Russian authorities, and all that is left is the authorization of Russian Prime Minister Dmitry Medvedev. With projected earnings of at least $700 million, Amur Minerals is a high risk, high reward micro-cap that is suitable for the liberal investor. Its share price jumped as much as 0.63 points after the license approval announcement, even hitting an all-time high share price of 12.22.
Silver Standard Resources (NASDAQ: SSRI)
Silver Standard carries out explorations for silver, zinc, gold and lead deposits in Mexico, Peru and Argentina, but its headquarters is in Canada. Silver Standard's stocks had a rollercoaster ride back in 2008, when it was still trading at $45 per share. It then fell down below $10, only to come back up again at $35 per share in 2011.
Now, the stock is trading in single digits at less than $5 per share. In spite of its volatile swings, Silver Standard is a speculative investment with strong upside potential.
