Mining stocks: A second scare

Amid debt concerns and falling revenues for mining stocks, private investors are better off keeping powder dry.

Summary: This year’s Mines and Money conference highlighted the major need to repair balance sheets caused by falling commodity prices, and outlined the potential impacts of a US interest rate rise on widespread debt across the mining industry. Looking to companies like Anglo American, which yesterday effectively cut its operations in half, it’s easy to see the significant challenges such companies face going forward. Investors should be aware that while you can see what a company owns, it’s more difficult to see its debts.

Key take out: Given high debt levels of mining companies, now is the time for equity investors to act as observers rather than participants, and wait for the dust to settle.

Key beneficiaries: General Investors. Category: Shares.



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