Residents of Bolgatanga, the Upper East regional capital say they have lost trust in micro-finance companies in the region. Most of the companies in this sector are large multinationals, though you will sometimes find small exploration companies and small specialist companies eg companies specialising in geological surveying. The commodities are all priced in dollars, so the exchange rate will affect the profits of companies in this sector outside the USA. This sector includes building and construction companies, motor manufacturers, electrical and mechanical engineers and chemical companies.
Thus, the best time to invest in mineral extraction companies is just before a global boom is ready to start, and the best time to sell is when the boom is in fukl swing and all prospective earnings are fully priced into the shares. These are cyclical companies and are heavily dependent on the economic and trade cycle. In particular, during recessions when capital investment dries up, these companies perform poorly. Profit margins can be high because not many new companies start up in this sector and hence competition is reduced.
Because they are usually supplying to the majority of their market already, these companies have low growth prospects, but instead pay a high dividend yield. This sector consists of the retail banks, investment banks, general and life assurance companies and other financial services companies. The general insurance companies (i.e. they insure against fire, burglary etc) have volatile profits and no borrowings. For instance, First Mining Finance ( OTCQB:FFMGF ) – the company that interests us here – recently purchased the Springpole Project, which, according to the 2013 PEA, has an NPV of $579 million at $1,300/oz gold, but an NPV of $1.03 billion at $1,600/oz gold.
With respect to this point, it is worth noting that despite the fact that there are companies with $1-$2/oz gold in the ground that buying high-quality ounces for $10 makes a lot of sense. The company just also optioned a project to a subsidiary of Indistrias Penoles SAB, which now has the right to buy its Puertecitos and Los Tamales properties for $1.5 million.
We suspect the company will option various permits to nearby mining companies looking to expand their footprints, or to grass-roots exploration teams with a couple million dollars looking for high-risk/high-reward opportunities. However, the management teams of these companies are not focused on fully exploiting this leverage insofar as their primary goal is to develop their respective projects. There are lots of financing companies and agencies which provides such options for the needy. In case of car lease finance or auto lease finance, one can enjoy using latest or high cost cars without buying it for a desired period of time.