We use the Emerging Trajectories platform to generate a number of risk scores for every copper mining company we're analyzing. These risk scores all go from 1 to 5, with "1" being an excellent indicator, and "5" being a very bad indicator for the associated risk.

Each of the risk scores is outlined below.

Financial situation risk scores look at how likely the company is to remain solvent in the coming 2-5 years. A score of "5" indicates a highly-indebted company that is likely to shut down or not be able to continue running as a going concern. A "3" is average -- assuming no major changes to the company's situation, it will likely do well. A "1" represents well-capitalized companies with money, resources, equity, etc. that will not only cover existing operations but likely enable the company to expand/grow or double-down on operations that are proving fruitful.

An experienced, mature, and well-functioning management team is critical to the success of a company. On a scale of 1 to 5, a "5" represents a team where investors should have clear concerns about their operating the company. This can include a very poor track record, a history of fraud, or other malicious behavior. A "4" would be inexperienced teams that have not acted maliciously, but do not have a track record. This means a "3" would be an average team -- 10+ years of experience in the industry, but no major achievements either. A "2" represents a team with significant "wins" or achievements under their belt. Finally, a "1" represents a team that has significant achievements and is also committing to making the current company something that generates massive returns for investors -- where they explicitly discuss ambitions, growing the company 10-fold, and so on.

This scores the company's portfolio of mining or resource operations. The more diversified a company, the more likely it is to do well. A second factor is a combination of established mines and exploratory projects, showcasing a long-run opportunity for resource extraction and sales. A "3" here is a well-managed company with 3 or more projects, at least one being a well-established revenue driver and one being more exploratory with potential for future gains. A "5" represents companies with exploratory portfolios and no established revenue drivers. A "1" is well-diversified company with lots of projects (5 or more).

Does the company risk being consumed with policy issues, strikes, commodities risks, or other issues? A "5" here is a company that is highly risky, for example, with the majority of its operations in countries that are unstable, risk military coups, nationalization of its mines, or social risks like strikes. A "3" would be a standard/average company, while a "1" would be one where a company is working only in regions that have incredibly stable governance and a long history of supporting mining projects.

If you were to buy the company's stock, is it possible to get a 10x return? This is where big companies are at a disadvantage -- a company with a $50B market cap might score all 5s on risks (i.e., be low risk), but growing to $50B is nearly impossible, so it would garner a "5" here. On this scale, a "5" means it's nearly impossible for the company to generate a 10x return because doing so would upend the industry's economic model or would require the company to do something that's never been done before. A "3" is a company that is mid-sized but can still generate a huge return if it becomes a market leader. A "1" represents a company where, given its operations, explorations, and team, can actually generate a 10x return if its projects go well. A "5" means it's not unrealistic to see the company 10x in size, though it might still require the stars to align, so to speak.