Whats Wrong, page-66

I think with using PE and PB ratios for mining companies may be a bit too conservative since mining companies have substantial capex that results in high depreciation/amortisation expenses, resulting in lower profits. I would suggest looking at the cash flow statement and checking their operating cash flows and net it off purchase of property, plant and equipment and also payments for mine development. This is a bit better as companies may be delivering healthy cash flows while declaring losses from past writedowns or depreciation. Some companies can be growing organically despite declaring losses. But if this is persistently the case, it implies the company is in the habit of making overpriced acquisitions that they end up writing down the value because the assets generate less cash flow than initially expected when they pay for it.