My Dad wants to buy some mining shares

[TheMotorcycleBoy]

I mentioned my 80 year old Dad over here a while back

viewtopic.php?p=305641#p305641

He's now chatting to me a fair bit now for share advice (!) and tips for additions to his 9 company £250k ISA portfolio. BTW his foli is basically a HYP. he owns NG., BAE, UU, HSBC. But recently swapped BP and IMB for ULVR and DGE.

He came over today. Yes we all chatted in the garden, social distancing and all that.

Anyway he's just mentioned buying about 5k of Rio Tinto RIO. He seems to want to spend his residual on a miner and a pharma. I know nothing of RIO and don't have enough time to research it.

So are they a decent miner? Any major problems I should warn him of? How do they rank in terms of BHP, Glencore, S32 etc. etc.

From a quick glance here https://www.sharesmagazine.co.uk/shares ... ndamentals the numbers seem reasonable, though the share itself is alarmingly cheap.

TIA

Matt

[monabri]

As a counter, how about BERI or BRWM.?

https://www.theaic.co.uk/companydata/0P00008ZK9

https://www.theaic.co.uk/companydata/0P00008ZOQ

[tjh290633]

I think there may be the odd problem about domicile with one or two mining shares. One, which I think was merged into Glencore, was Swiss and there were withholding tax issues.

There are differences in emphasis between RIO, BHP and Anglo American, but you are bound to find that. RIO are big in iron ore, for example, but you need to look at their annual reports to compare them. The production reports which they issue give you a good idea of their interests. South32 was into South African coal, but got rid of that. They have a number of specialised interests. Looks like a candidate subject for one of your mammoth investigations.

There are lots of miners on AIM, and are probably best avoided, as are any with operations in the former Soviet Union.

TJH

[Itsallaguess]

As a counter, how about BERI or BRWM.?

https://www.theaic.co.uk/companydata/0P00008ZK9

https://www.theaic.co.uk/companydata/0P00008ZOQ

I'd agree that with something like resource stocks, then unless someone knows something specific about a particular share that might warrant an individual investment in it, then a more 'thematic' approach via collectives like the above would make more sense to me.

Single-stock risk would be a larger concern for me in this area of the market than others...

Cheers,

Itsallaguess

[TheMotorcycleBoy]

Thanks all,

There are differences in emphasis between RIO, BHP and Anglo American, but you are bound to find that. RIO are big in iron ore, for example, but you need to look at their annual reports to compare them. The production reports which they issue give you a good idea of their interests. South32 was into South African coal, but got rid of that. They have a number of specialised interests. Looks like a candidate subject for one of your mammoth investigations.

That's what I was dreading. I'd hoped that this thread would lead to it's circumvention. What with WFH now, my "home" study has become my "day-job" study too, and it's less inspiring to spend quite as much time as before on the analysis. In fact WFH has altered the family dynamic considerably!

There are lots of miners on AIM, and are probably best avoided, as are any with operations in the former Soviet Union.

Indeed. Mel and I hold one. CAML Central Asian Metals. I did my DD on them about 18 months back and seemed to be reasonably well managed. V. cash generative. Indeed they had zero net debt until mid-2017 when they purchased a large asset (they completed a reverse takeover for a Macedonia business) But they have been paying the debt down very fast. Their other big assets are in CA, yes, Kazahkstan.

But I quite like their metals too, copper, zinc and lead. Plus their deliver silver as a side product too.

However, seeing as this one is a volatile AIM, with tight cash management (they just cut a div), I didn't think it was one I should push with Dad.

Matt

[TheMotorcycleBoy]

As a counter, how about BERI or BRWM.?

https://www.theaic.co.uk/companydata/0P00008ZK9

https://www.theaic.co.uk/companydata/0P00008ZOQ

Alas Dad's got negative views on Investment Trusts. Mel and I hold a couple (JCGI, UKW, PCT), but alas I don't know the management structure (or any scandal-type histories) to be able to argue the toss over it with him. I think he's formed associations with IT managers being high rolling champagne lifestyle richkids that add little value!!

BTW I'm currently trying to persuade him to join TLF. He says he'd enjoy meeting some of you. I mentioned that Terry and Lorna and some of the others met up at times and chatted, and he liked the idea of that. He's more of a social animal than me.

Best get back to work.

Matt

[Urbandreamer]

I own some Rio and have recently bought more.

A few points come to mind.

1) It's a mining share. This means that it's income is fairly cyclical. Most miners are badly affected by Covid, Rio less so as you can't turn off a iron furness. If you do then you need to build a new one.
2) It's a mining share. Such companies have a poor enviromental history. Rio claims to be improving it's act. It's certainly doing the easy stuff like moving to using electricity from renewable sources to power as much of its operations as possible. However it has a history and people are going to be complaining about that history for generations to come.
3) It's a mining share. Mining conditions are NOT safe. People are killed and seriously hurt. The managment claim to be doing a lot and trying to do more. Considering the number who work for them I find their recent record as surprisingly good.

Rio are known as a Iron miner, because they are the big player in that commodety. However they do mine and process other metals and minerals. It's not a one product company. Indeed it use to mine coal, though it doesn't any more and some rember it as Rio tinto zinc.

Finaly, we can't talk mining and in particular AIM chineese gold mining shares and historic examples of such without remembering the investor/speculator and writer Mark Twain's comment.

“A mine is a hole in the ground with a liar standing next to it.”

The question about iron miners is, do you think that we will have a rising or falling demand in the next few years. It's not an easy question given the amount of metal recycling and uses the metal is put to.
The same question exists for copper miners etc.

[Wuffle]

Another vote for BERI.
Self confessed amateurs vs supposedly experts and full price vs 20% discount.
Had a nibble myself around 50p based on the above.
And a bit of gold exposure in case the wheels really fall off. Not that it will matter.

W.