Understanding Financial Statements of a Mining Company

Those long columns of numbers at the back of a company’s annual report may look dry, but they can reward the investor who takes the trouble to give them careful study. By learning the past earnings record and current financial health of a company, an investor can decide whether or not a stock is worth his while. The better informed the share holder, the safer he is, especially in the case of high-risk junior companies.

Simply put, the annual report is the formal account of the past year’s financial activities and operations. It is published after the institution’s fiscal year-end and issued to share holders. Not only do such reports have to meet acceptable accounting standards, they must contain information required under provincial securities legislation or federal or provincial corporation laws. In addition, shareholders must receive them within a specified period of time.

Annual reports show the names of directors and details of remuneration for officers and directors, including details of their share purchase plans; a list of investments in other corporations wholly or partly owned by the company; details of long-term debts; and information on lawsuits the company may be facing.