When’s the worst time to buy shares in small miners and oil explorers? When commodities prices are plunging, I’d say, especially if they’re companies making little or no profit — a slump in the prices of the stuff they sell is far more likely to send them to the wall than it would with, say, BP or Rio Tinto.
But by the same token, surely the best time to buy such companies is when prices in their sectors are staging a comeback, as they’re more likely to reward us with multi-bagger gains than the FTSE 100 giants.
Look at Amur Minerals (LSE: AMC), for example, whose share price has been in a bit of a slump — at 4.8p as I write, Amur shares are down 90% from their high point in June 2015. But the latest independent update on the Kubuk nickel-copper deposits at the firm’s Kun-Manie project, just published a few days ago, has increased the likely available resources again. Amur now says the total measured and indicated resources at the mine in the far East of Russia have doubled since April 2015, and this latest step concludes the evaluation phase of Amur’s Definitive Feasibility Study.
There is, of course, still a long way to go, but any progress in the prices of nickel and copper will surely help. Both have been picking up, though both have dropped back a little of late — but if metals prices really have bottomed out, the prospects for Amur will surely have brightened a little.
With the price of a barrel of Brent crude getting ever closer to the magic $50 mark, the future for Xcite Energy (LSE: XEL) must be looking a little rosier too. Xcite shares are down over the past 12 months, to 14.9p, but we’ve actually seen a 32% recovery since a recent low on 20 January.
Sustainable profits from Xcite aren’t expected before 2018, and there will be plenty of debt that needs to be serviced before then — in fact, when its full-year results were released in March, the firm told us it was in talks with bondholders in order to “develop financial flexibility” regarding bond payments due on 30 June.
With Xcite’s reserves update issued the same day looking pretty positive, the chances of the firm getting its finances sorted for the longer term are looking increasingly good to me — although it’s clearly still only for those who can handle a bit of risk.
Platinum is one of those precious metals that has uses other than just sitting around looking shiny, and the price of the stuff has been picking up lately, to $1,055 per ounce at the time of writing. And that hasn’t done Jubilee Platinum (LSE: JLP) any harm at all, with Jubilee shares having more than doubled in the past 12 months — they’ve been on a bit of a slow fall for a few months recently, but an operational update on 12 May gave the shares a boost, and they stand at 3.3p today.
The chrome recovery plant operated by subsidiary Jubilee Tailings Treatment Company is now fully operational and has achieved a sustainable processing capacity that’s 30% ahead of expectations. Production of 6,000 tonnes of chromite is targeted for May, rising to 8,000 tonnes in June, and that surely makes Jubilee shares that bit more attractive.
Small companies with big potential can seriously enlarge your wealth, but which ones should you choose and how do you avoid the biggest risks? One way is to get a copy of our latest report, 1 Top Small-Cap Stock From The Motley Fool.
It's a small company whose shares have already rewarded investors well, yet it's fundamentals don't look at all stretched -- and The Motley Fool’s top analysts think there could be as much as another 50% upside to come!
Do you want to know the name of this and find out why our experts think it could bring you success? Just click here for your copy of the report today, and it won't cost you a single penny.
Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended BP and Rio Tinto. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.