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This article appeared in the October 2011 ASX Investor Update email newsletter. To subscribe to this newsletter please register with the MyASX section or visit the About MyASX page for past editions and more details.
Two top books to help with resources boom decisions.
By Sean Dostal, Moneybags
The books mentioned below are available at Moneybags for 20 per cent off the recommended retail price in October 2011.
Most investors are not geologists. So when a company is about to float on the sharemarket or releases its latest mining results, it can be very hard to make an investment decision. Fortunately, there are a couple of excellent Australian books that will help you understand the language and consequences of these reports and to make better decisions. I rate these two mining books highly.
A Sharebuyer's Guide To Investing In The Australian Mining Boom, by Allan Trench
This is one of the best investing books published in the past few years. Often books are written with ulterior motives, such as trying to get you to subscribe to a newsletter, sign up for a course, or build the profile of the author's financial business. In contrast, Allan Trench is a true industry expert and has created a great tome for anyone interested in investing in resource companies.
At 450 pages it is quite a hefty book from cover to cover, but doubles as a reference tool when you want to learn about a particular topic of interest. For example, chapter 8 covers a number of potential strategies for making money on-market or through investing in resource-sector floats.(You can download this chapter free here.) This book takes investors logically through the various stages and types of resource companies, from exploration to project development. Of particular interest to investors will be the commodity profiles; 28 different commodities are described by factors such as demand, indicative price, supply, market and investment opportunities. It also includes profiles of 40 emerging ASX-listed resource companies.
Despite the exceptional returns of 118 per cent on average for resource shares in 2010, the author concludes that in several instances there are still spectacular share price gains around the corner. It's a great resource book and in my opinion is underpriced for the volume and quality of information included.
The Mining Valuation Handbook, 3rd Edition, by Dr Victor Rudenno
This book is written for both investors and management of resource companies (mining and energy). It gives an excellent overview of the industry and the different stages of development from exploration through to refining.
The book is not a light read but will prove an invaluable reference for astute investors, analysts and company management. It works through each stage of the mining process with detailed descriptions of what actually happens, financial analysis and case studies. Reading this book will give you a greater understanding of:
- Factors affecting share price performance (short and long-term).
- Commodity values and forecasting.
- Feasibility studies.
- Classification of resources and reserves.
- Hedging commodities and exchange rates.
- Valuation and pricing techniques.
- Quantifying risk.
- Dealing with inflation.
- Commodity profiles.
It is excellent value and remains one of the cornerstone titles for serious investors and analysts of the resources industry.
About the author
Sean Dostal is the managing director of Moneybags.com.au, a leading online shop for investment books, software, courses and newsletters. For more information (including chapter extracts and author profiles) or to purchase books mentioned in this article, visit Moneybags.
The ASX Mining and Metals fact sheet provides useful information on the top 50 mining shares listed on ASX.
The views, opinions or recommendations of the author in this article are solely those of the author and do not in any way reflect the views, opinions, recommendations, of ASX Limited ABN 98 008 624 691 and its related bodies corporate ("ASX"). ASX makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions. To the extent permitted by law, ASX excludes all liability for any loss or damage arising in any way including by way of negligence.
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