1. Reputation of management, which you can determine by:
   1. Is the CEO singularly dedicated to the company or is this company only one horse is a large stable of companies. You can obtain this information from the records of the administrative law body governing the exchange on which the share trades or from that exchange itself. Some individuals are officers and/or directors of up to 30 companies. The problem with this is simple. If a property is decided upon, which company in the stable gets the property? What is the basis of his decision? This also explains why some of these individuals draw very low salaries, something about which they like to call attention. However if you add up the 30 or more small salaries from the different companies in their stable, the total comes to a very large sum. If you discover that this type of individual runs your company with interest in many different issues, run (don't simply walk) away.
   2. What properties has the management been involved in their career as a manager of junior companies that have actually come into production? The fact that a person may have once worked for a major gold producer and claims a major's property as a result of his efforts is thin ice. In a major no one person is responsible for any one property. Again run, don't walk away.
2. What is the present policy of the company as far as granting options to insiders? Beware of 'paper-hangers' in the disguise of real people. The finest property can be diluted to irrelevancy to the shareholders' interest per share. If the company is liberal with granting of options to insiders, again run do not simply walk away. If the company has a policy that allows for re-pricing of insider options to lower levels for insiders when the share declines, run away even faster.
3. Does the companies have deals with major producers. Since you cannot evaluate the property without a degree in Geophysics and Geology, the best you can do is to determine if those who are so capable have seen fit to make deals with the junior. If they have do not, then scrutinize the company much more closely before investing in it. If they have, how many deals have been made? Be careful of the one property company. If it fails, there is no bottom in the stock regardless of how good the gold environment is.
4. Is the company you have selected on a path towards percentage joint venture "JV" deals or the on the royalty path? For those that automatically believe percentage JVs are better than royalty agreement, look at Royal Gold and its accomplishments. A mix between both is, in my opinion, a wise decision. Royalty is the direction I have chosen to go. There is nothing to preclude a junior royalty company from advancing a property to a level whereby a spectacularly good deal can be made. A net smelter royalty (NSR) deal means that your company does not put one cent into the deal after the major elects the royalty option. It, unlike the percentage deal, means that you do not deal with the major for your reward. On a net smelter royalty (NSR) deal your percentage of gold production comes directly from the smelter. An income royalty deals puts the royalty junior into the hands of the major in regard to the level of ethics of the major. So far I have never seen a gold mine run in a taxed area make a dime in that area. It is usually expensed to death by the major from a tax-free location. Beware of Income royalty Deals as they suffer from the same problem as a percentage "JV" deal. That is they are at the accounting mercy of the merciless majors. A merciful major gold producer is unfortunately an oxymoron of world status. For the 1/3 of your portfolio consider owning at least one junior net smelter royalty (NSR) company and one junior percentage company that both meet the criteria of integrity.
5. The cap value of the company should not exceed a modest multiple of the already capitalized exploration costs. This will change at various stages of the general market environment. However if all other criteria are equal you should buy the share at a cost that is not extremely above what the company has already put into retained properties.
6. The more senior the place of listing generally the better the application of rules and regulations are.
7. The company should have enough funds in place in the treasury to be able to finance their operation for at least two years from the time of your purchase. They should also have some means of income that is in place other than simply draining the treasury by which they can meet ongoing corporate expenses.
8. The company should have in its additional land package on not yet dealt properties what is called blue sky or potential upside based not on hope but on scientific disciplines such as geophysics and geology. It cannot be unexplored land but must have through the efforts of the junior considerable scientific information for mineral targeting and conclusions showing significant potential acceptable to the industry standards.
9. Just as in the selection of your non-hedged producer, the company stock price must be bullish on the monthly, weekly and daily charts. The weekly and daily must agree that a purchase is warranted. A price objective should be readable from the discipline of vertical and horizontal counts on point and figure charting. In the case of the junior, attention to the technical is even more critical than the share of the non-hedged producer.

   After this work is completed the discipline of selling one third of the total portfolio into market rises in the general price of gold and appreciation of the gold shares MUST BE adhered to.

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