Junior Mining Investor

Some useful investor terms

Lithium Carbonate

 

When I was first starting out with investments some of the terms being batted around..
So I though I would put together a list of often used Terms as a helper to those starting out on their journey, Feel free to request other information on this page if it is missing... Contact Me

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Accumulate -
is meant to convey the analyst's belief that the investor should not sell or liquidate shares of common stock but, rather, acquire additional shares whenever cash flow permits, adding to a position so that it grows over time.

Account Ratio -
compares two aspects of a financial statement, such as the relationship (or ratio) of current assets to current liabilities. The ratios can be used to evaluate the financial condition of a company, including the company's strengths and weaknesses.

Annualized
- rate of interest, inflation, or return on an investment, recalculated as an annual rate.

ACCC / Australian Competition and Consumer Commission
- Administers the Competition and Consumer Act, and has standing to take action in the Federal Court of Australia to enforce its provision. The Competition and Consumer Act is a broad range of provisions, such as provisions on anti-competitive conduct, the Australian Consumer Law and regulation of telecommunications and energy industries.

AGM / Annual General Meeting
- is a meeting of the general membership of an organization. These organizations include membership associations and companies with shareholders.

All Ordinaries -
the full list of companies trading on the ASX

Arbitrage
- the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.

Ascending Triangle /(as in financial charting) -
An ascending triangle is a bullish chart pattern used in technical analysis that is easily recognizable by the distinct shape created by two trendlines. In an ascending triangle, one trendline is drawn horizontally at a level that has historically prevented the price from heading higher, while the second trendline connects a series of increasing troughs. Traders enter into long positions when the price of the asset breaks above the top resistance.

ASIC / Australian Securities and Investments Commission
- Enforces company and financial services laws to protect consumers, investors and creditors; regulates and informs the public about Australia Companies.

Asset - property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.

ASX / Australian Securities Exchange -  an Australian public company that operates Australia's primary securities exchange.
 
ASX50 / ASX100 / AX200 / ASX300
- S&P/ASX index's are market-capitalization weighted and float-adjusted stock market index of Australian stocks listed on the Australian Securities Exchange from Standard & Poor's. The number after the index represent the top market cap companies in that group. Institutional investors will tend to only buy stocks from these categories of companies.

ATO / Australian Taxation Office -
Australian government statutory agency and the principal revenue collection body for the Australian government.

Bagger / Multi-Bagger
- A Multibagger Stock is an equity stock which gives a return of more than 100%. Although multibagger stocks exist everywhere but this term is more commonly used in emerging markets

Bear / Bearish
- bear market is a condition in which securities prices fall and widespread pessimism causes the stock market's downward spiral to be self-sustaining. Investors anticipate losses as pessimism and selling increases.

Bear Raid - attempting to push the price of a stock down by heavy selling or short selling.

Bear Trap - A bear trap is a false signal that the rising trend of a stock or index has reversed when it has not. A bear trap prompts traders to place shorts on the stock or index, since they expect the underlying to decline in value. Instead of declining further, the investment stays flat, or slightly recovers. (see Bull Trap)

Blackout Period - A blackout period is a period of at least three consecutive business days but not more than 60 days during which the majority of employees at a particular company are not allowed to make alterations to their retirement or investment plans. A blackout period usually occurs when major changes are being made to a plan.

BOA / Binding Offtake Agreement - Offtake agreements are legally binding agreements related to transactions between buyers and sellers. The agreements are reached prior to the actual goods being produced, such as with futures. Often, these agreements can help the selling company acquiring financing for future construction or expansion projects through the promise of future income and proof of an existing market.

Bots - A term given to computers running programs linked to the share trading systems that run specific algorithms to buy and sell shares. While not a legal practice to manipulate share prices and hard to prove, with the computer systems being able to trade in nano-seconds and ahead of forming trends, it is inevitable that this practice is used in some form or another.

Broker / Stockbroker - is a regulated professional individual, usually associated with a brokerage firm or broker-dealer, who buys and sells stocks and other securities for both retail and institutional clients through a stock exchange or over the counter in return for a fee or commission.

Bull/Bullish - bull market is a financial market of a group of securities in which prices are rising or are expected to rise. The term "bull market" is most often used to refer to the stock market but can be applied to anything that is traded, such as bonds, currencies and commodities.

Bull trap - A false signal indicating that a declining trend in a stock or index has reversed and is heading upwards when, in fact, the security will continue to decline.


Capital - It is the accumulated assets of a business that can be used to generate income for the business. Capital includes all goods that are made or created by humans and used for producing goods or services. Capital can include physical assets, such as a production plant, or financial assets, such as an investment portfolio.

Capital gearing ratio -
measures the proportion of a company's borrowed funds to its equity. The ratio indicates the financial risk to which a business is subjected, since excessive debt can lead to financial difficulties.

Cash Flow -
reveals how a company spends its money (cash outflows) and where the money comes from (cash inflows). We know that a company's profitability, as shown by its net income, is an important investment evaluator.

Cash Merger
- one company buys another, the acquiring company will pay for the target company's shares with cash, stock or both. A cash-for-stock transaction is fairly straightforward: target company shareholders receive a cash payment for each share purchased.

CGT / Capital Gains Tax - Tax on the profit from the sale of capital assets such as shares or property.

Churning - When a trader places both buy and sell orders at about the same price. The increase in activity is intended to attract additional investors, and increase the price.

Day Trader - somone who aims to hold any one investment for less than one day, opening positions each morning and closing them before the market shuts down for the day. This is a completely separate strategy than just short term (ST) investing.

Debt to equity ratio -  is a debt ratio used to measure a company's financial leverage, calculated by dividing a company's total liabilities by its stockholders' equity. The D/E ratio indicates how much debt a company is using to finance its assets relative to the amount of value represented in shareholders' equity.

De-Risking - it increases the range of goods or services it produces or increases the number of countries in which it does business in order to reduce the risk that something bad might happen

Descending Triangle /(as in financial charting) -
A bearish chart pattern used in technical analysis that is created by drawing one trendline that connects a series of lower highs and a second trendline that has historically proven to be a strong level of support. Traders watch for a move below support, as it suggests that downward momentum is building. Once the breakdown occurs, traders enter into short positions and aggressively push the price of the asset lower.

DFS / Definitive / Detailed Feasability Study
  - Detailed feasibility studies are the most detailed and will determine definitively whether to proceed with the project. A detailed feasibility study will be the basis for capital appropriation, and will provide the budget figures for the project. Detailed feasibility studies require a significant amount of formal engineering work, are accurate to within 10-15% and can cost between ½-1½% of the total estimated project cost.

Dillution - occurs when holders of stock options (such as company employees) or holders of other optionable securities exercise their options. When the number of shares outstanding increases, each existing stockholder will own a smaller, or diluted, percentage of the company, making each share less valuable.

Discount Factor - The percentage rate required to calculate the present value of a future cash flow. For example if investing at 4% interest, then the present value is discounted by 4% as it is worth less than future earnings due to interest.

Dividens - a sum of money paid regularly (typically annually) by a company to its shareholders out of its profits (or reserves).  Usually a few cents ($0.01) per share...

Down Ramping / Ramper - This scheme is usually orchestrated by savvy online message board posters (a.k.a. "Bashers") who make up false and/or misleading information about the target company in an attempt to get shares for a cheaper price. This activity, in most cases, is conducted by posting libelous posts on multiple public forums.

Due Diligence - a comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential.

Earnings - are the same as its net income or its profit. Either term means the same thing. Earnings are usually calculated as all revenues (sales) minus cost of sales, operating expenses, and taxes, over a given period of time (usually a quarter or a year)

EBIT / earnings before interest and taxes - measure of a firm's profit that includes all expenses except interest and income tax expenses. It is the difference between operating revenues and operating expenses.

EBITDA / Earnings before interest, tax, depreciation and amortization - measure of a company's operating performance. Essentially, it's a way to evaluate a company's performance without having to factor in financing decisions, accounting decisions or tax environments.

EPS - Earnings per share

Feasability Study - evaluation of a proposed mining project to determine whether the mineral resource can be mined economically.

Financial Charting - The practice of using statistics to determine trends in security prices and make or recommend investment decisions based on those trends. Technical analysis does not attempt to determine the intrinsic value of securities, but instead focuses on matters such as trade volume, demand, and volatility. Technical analysts evaluate short-term trends almost exclusively, which is both a strength and a weakness in their analysis. They are sometimes called chartists because of the importance charts have in technical analysis.

FOMO - Fear Of Missing Out

Friendly Takeover
- A situation in which a target company's management and board of directors agree to a merger or acquisition by another company. In a friendly takeover, a public offer of stock or cash is made by the acquiring firm, and the board of the target firm will publicly approve the buyout terms, which may yet be subject to shareholder or regulatory approval. This stands in contrast to a hostile takeover, where the company being acquired does not approve of the buyout and fights against the acquisition. 

Fundementals - in accounting and finance, is the analysis of a business's financial statements (usually to analyze the business's assets, liabilities, and earnings); health; and its competitors and markets.

Hedge Fund - a limited partnership of investors that uses high risk methods, such as investing with borrowed money, in hopes of realizing large capital gains.

Hostile Takeover - The acquiring firm can use unfavorable tactics, such as a dawn raid where it buys a substantial stake in the target company as soon as the markets open, causing the target to lose control of the company before it realizes what is happening. The target firm’s management and board of directors may strongly resist takeover attempts through tactics such as a poison pill, which lets the target’s shareholders purchase more shares at a discount to dilute the acquirer’s holdings and make a takeover more expensive.

Gearing - refers to the level of a company's debt related to its equity capital, usually expressed in percentage form. It is a measure of a company's financial leverage and shows the extent to which its operations are funded by lenders versus shareholders.

General Partnership - is an arrangement by which partners conducting a business jointly have unlimited liability, which means their personal assets are liable to the partnership's obligations.

Gross Profit - is a company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.

Green Day/All in the Green - Green represents an increase in day on day value of a share..(the colour used by trading systems to representive a upward trending value). Opposite of  Green  is  Red


Insider Trading - Insider trading is the buying or selling of a security by someone who has access to material nonpublic information about the security. Insider trading can be illegal or legal depending on when the insider makes the trade. It is illegal when the material information is still nonpublic.

Institutional Investor
- A class of mutual fund shares available for sale to investing institutions, either on a load or no-load basis. With sizable minimum investments, usually around $500,000 or more, funds will typically waive any front-end sales charges on these shares.

IRR / Internal Rate of Return - is a metric used in capital budgeting measuring the profitability of potential investments. Internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

IPO / initial public offering - is the first time that the stock of a private company is offered to the public. IPOs are often issued by smaller, younger companies seeking capital to expand, but they can also be done by large privately owned companies looking to become publicly traded.

JV - Joint Venture, a commercial enterprise undertaken jointly by two or more parties that otherwise retain their distinct identities.

Liability -  financial debt or obligations that arise during the course of its business operations. Liabilities are settled over time through the transfer of economic benefits including money, goods or services.

Limited Liability - is where a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a company or partnership. If a company with limited liability is sued, then the claimants are suing the company, not its owners or investors.

Limited Partnership - is a form of partnership similar to a general partnership, except that where a general partnership must have at least two general partners (GPs), a limited partnership must have at least one GP and at least one limited partner.

Liquidate - to sell shares and convert to money.

Loss - is an excess of expenses over revenues, either for a single business transaction or in reference to the sum of all transactions for an accounting period.

LT/ Long term traders - usual hold on to their shares for more than a year, benefiting from lower Captial Gains Tax (in Australia reducing CGT by 50%).

Margin Trading - Also called buying on margin. A method of buying shares that involves borrowing a part of the sum needed from the broker executing the transaction. The collateral for the loan is normally securities in the investor's account.

Market Capitalization / Cap - is the market value at a point in time of theshares outstanding of a publicly traded company, being equal to the share price at that point of time times the number of shares outstanding. ie 700,000 shares at $0.50 = Market Cap of $350M

Market Correction - is a reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index to adjust for an overvaluation. Corrections are generally temporary price declines interrupting an uptrend in the market or an asset.

MOA / Memorandum of Association - This legal document is prepared in the process of formation and registration of a limited liability company to define the shareholders' relationship to each other and to the company being formed.

MOU / Memorandum of UnderstandingIn general contract law, the MOU is the first stage in the creation of a formal agreement (contract). This document sets out the points of agreement (the intended common lines of action) of the parties for the purposes of the agreement. Nowadays, the MOU is often an integral part of the contract and courts will hold if one party fails to meet the obligations of the MOU provisions.

Net Gearing - this is a measure of a company's financial leverage calculated by dividing its net liabilities by stockholders' equity. The formula is : (Total Debt - Cash) / Book Value of Equity

Net Profit - the actual profit after working expenses not included in the calculation of gross profit have been paid.

NPV / Net Present Value / NPW / Net Present Worth - is a measurement of the profitability of an undertaking that is calculated by subtracting the present values (PV) of cash outflows (including initial cost) from the present values of cash inflows over a period of time.

Offtake Agreement - an agreement between a producer of a resource and a buyer of a resource to purchase or sell portions of the producer's future production.

OTC / Over the Counter - is a security traded in some context other than on a formal exchange such the ASX or NYSE. The major difference is that OTC securities are unlisted, so there is no central exchange for the market. All orders of OTC securities must be made through market makers who, instead of just matching orders, actually carry an inventory of securities to facilitate trading.

Operational Margin - is a measure of profitability. It indicates how much of each dollar of revenues is left over after both costs of goods sold and operating expenses are considered. The formula is for calculating operating margin is: Operating Margin = Operating Earnings / Revenue.

Overbought - refers to a situation in which the demand for a certain asset or security unjustifiably pushes the price of that asset or underlying asset to levels that are not justified by fundamentals. Overbought is often a term used in technical analysis to describe a situation in which the price of a security has risen to such a degree - usually on high volume - that an oscillator has reached its upper bounds.

Oversold - is a condition in which the price of an underlying asset has fallen sharply to a level below where its true value resides. This condition is usually a result of market overreaction or panic selling and is generally considered short term in nature.



PFS / Preliminary feasibility Study or "pre-feasibility studies" are more detailed than order of magnitude studies. A preliminary feasibility study is used in due diligence work, determining whether to proceed with a detailed feasibility study and as a "reality check" to determine areas within the project that require more attention. Preliminary feasibility studies are done by factoring known unit costs and by estimating gross dimensions or quantities once conceptual or preliminary engineering and mine design has been completed. Preliminary feasibility studies are completed by a small group of multi-disciplined technical individuals and have an accuracy within 20-30%.

Portfolio - is a grouping of financial assets such as stocks, bonds and cash equivalents, as well as their funds counterparts, including mutual, exchange-traded and closed funds. Portfolios are held directly by investors and/or managed by financial professionals.

Public Company - a company whose shares are traded freely on a stock exchange.

Pump and Dump - a form of stock fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price.

P/B / Price to Book ratio - is a financial ratio used to compare a company's current market price to its book value. It is also sometimes known as a Market-to-Book ratio. The calculation can be performed in two ways, but the result should be the same each way.

P/S / Price to Sales ratio / PSR -  is a valuation metric for stocks. It is calculated by dividing the company's market cap by the revenue in the most recent year; or, equivalently, divide the per-share stock price by the per-share revenue.

Private Company
- a private company can be a corporation, a limited liability company, a partnership, or a sole proprietorship, as long as the shares are privately held and not traded publicly.

Profit -
a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something.

Ramping/Ramper
- Opposite to Down Ramping, Actions designed to artificially raise the market price of listed securities and to give the impression of voluminous trading, in order to make a quick profit.

Red Day/All in the Red - Red represents an decrease in day on day value of a share..(the colour used by trading systems to representive a downward trending value). Opposite of  Red  is  Green

Rebalance - Rebalancing is the process of realigning the weightings of a portfolio of assets. Rebalancing involves periodically buying or selling assets in a portfolio to maintain an original desired level of asset allocation.

Retail Investor - is an individual who purchases securities for his or her own personal account rather than for an organization. Retail investors typically trade in much smaller amounts than institutional investors such as mutual funds, pensions, or university endowments.

Revenue - is the amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the "top line" or "gross income" figure from which costs are subtracted to determine net income.

ROA / Return on Asset - is an indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage.

ROE / Return on Equity - is a measure of profitability that calculates how many dollars of profit a company generates with each dollar of shareholders' equity. The formula for ROE is: ROE = Net Income/Shareholders' Equity. ROE is sometimes called "return on net worth."

ROI / Return of Investment - usually expressed as a percentage and is typically used for personal financial decisions, to compare a company's profitability or to compare the efficiency of different investments. The return on investment formula is: ROI = (Net Profit / Cost of Investment) x 100.

RSI / Relative strength index - is a technical indicator used in the analysis of financial markets. It is intended to chart the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period. The indicator should not be confused with relative strength.

Share options - a benefit in the form of an option given by a company to an employee to buy a share in the company at a discount or at a stated fixed price. The employee not having to pay for them until well into the future, and usually not within a certain time period. (other restrictions may apply)

Short/Shorting/Shorter Selling - Short selling is the sale of a share that is not owned by the seller, or that the seller has borrowed. Short selling is motivated by the belief that a share's price will decline, enabling it to be bought back at a lower price to make a profit.

SP - Share Price

Spodumene - is a pyroxene mineral consisting of lithium aluminium inosilicate, LiAl(SiO3)2, and is a source of lithium. The source of Hard Rock Lithium mining.

Spot Price - the current price in the marketplace at which a given asset such as a security, commodity or currency can be bought or sold for immediate delivery. While spot prices are specific to both time and place, in a global economy the spot price of most securities or commodities tends to be fairly uniform worldwide. In contrast to spot price, a security, commodity or currency's futures price is its expected value at a specified future time and place.

Stock Merger - is a strategy used during a merger or acquisition of a company. The acquiring company essentially uses its own stock as cash to purchase the business. Each shareholder of the acquired company will receive a pre-determined amount of shares from the acquiring company.

Stock Market Bubble - is a type of economic bubble taking place in stock markets when market participants drive stock prices above their value in relation to some system of stock valuation. Behavioral finance theory attributes stock market bubbles to cognitive biases that lead to group think and herd behavior.

Stock Market Crash
- is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth. Crashes are driven by panic as much as by underlying economic factors. They often follow speculative stock market bubbles.

ST / Short term - refers to holding any particular investment for less than one year. Many investors take this to extremes, however. Day traders aim to hold any one investment for less than one day, opening positions each morning and closing them before the market shuts down for the day. 

Substantial Holding - includes where a person and their associates have a relevant interest in 5% or more of the total number of votes attaching to voting shares in the body. 

Tax Avoidance - the arrangement of one's financial affairs to minimize tax liability within the law.

Tax Evasion - the illegal nonpayment or underpayment of tax.

TO - takeover bid is a type of corporate action in which an acquiring company makes an offer to the target company's shareholders to buy the target company's shares in order to gain control of the business. Takeover bids can either be friendly or hostile.

Top Up - Usually refers to buying more shares at a favourable price.

Underwriting - In the securities industry an underwriter is a company, usually an investment bank, that helps companies introduce their new securities to the market.

Whale - In investment terminology, a whale is a prospect who is capable of buy up stock in very large quantities.