After jumping to all-time record prices in 2011, the precious metals complex fell under corrective pressure. By the tail end of last year, gold bullion prices were staring at triple-digit prices. Silver valuations were also distressed, floating desperately at multi-year lows.
But for diehard precious metal investors, the long-awaited rally finally came to fruition. While equity markets rang in 2016 with severe volatility, both gold and silver had a banner month. That was followed up by even greater momentum throughout the winter season, particularly for gold. Silver played catch-up in April, jumping 19% for the month. Despite the usual ups-and-downs of the commodity sector, precious metals remain one of the best investments of the year so far.
That has obviously been a big boon for mining companies. When the metals complex first started to correct, mining operations were under heavy fire. Not only did the average selling price of their products decline, overhead costs began to rise. That led many firms to the brink of bankruptcy. But with this year's rally, miners have never looked better.
Still, the specter of volatility remains high. Macroeconomic events, such as the Brexit, are hard to predict, and the reaction across financial sectors harder still. Nowadays, mining companies can't rely solely on commodity pricing mechanisms. Too much leverage towards any one cog in the broader business strategy would inevitably repeat the same mistakes of 2011.
This is where Nippon Dragon Resources Inc. (TSX:NIP.V) enters the arena. Unlike its competitors, Nippon Dragon -- formerly Rocmec Mining Corp. -- is both a mining and a technology company. Using its patented thermal fragmentation method, workers are able to mine in tight spaces and in areas that were once geologically intractable. That really opens up avenues that are simply not available to other organizations.
Accountants love Nippon Dragon as thermal fragmentation is easier on the wallet. Its structural efficiency allows for fast turnaround and less dependence on manpower. The process also has the added bonus of converting previously uneconomical mines into fully functional operations. There's simply nothing like this in the mining sector!
Best of all, Nippon Dragon is politically friendly. In the age of "go green" initiatives, environmental sustainability is a big issue. One of several benefits of thermal fragmentation is that it consumes less energy than traditional mining procedures, and therefore, emits less greenhouse gases. The technology also has less impact on the surrounding environment -- a major concern of municipal governments and nearby residents.
Of course, Nippon Dragon isn't an investment for everyone. Trading at around 8 cents per share in the American over-the-counter market, Nippon is highly speculative. Potential buyers should carefully consider the risks involved with thinly-traded securities. However, with smart money management, this unique mining operation has the right stuff to pleasantly surprise.