To be fair to the mining sector, there are some parts which are (in my humble opinion) suitable for public markets. A good example would be the potash and iron ore miners that are producing (e.g. Potash, Mosaic, Cliff’s). They generally do not exaggerate the size of their reserves. Many of them have mines with very long lives (e.g. many have been in operation for decades) so their future cash flows are easier to analyze than other mines/commodities that deplete faster. There isn’t a lot of geological uncertainty about their reserves so it is very hard to make promotional claims about them.
Potash and iron ore happen to be two commodities where the commodity price has skyrocketed. Unlike gold stocks, iron and potash companies have seen a strong increase in their cash flows and share prices. And some of them were buying back stock in 2008 and 2009 when their share prices were depressed. They have done a pretty good job of creating shareholder value.
As well, in iron ore and potash there aren’t a lot of overly promotional stocks that make grand claims about their reserves and are constantly issuing equity or using their stock to roll up other companies. Stocks like that usually end badly. An example for oil & gas would be ATPG (high short interest; the interest on the borrow at one point was over 90%… a few times that of credit card debt). ATPG was constantly making claims about its reserves but it did not make money in a bull market for oil and is now in financial difficulties.
As always, remember to do your own homework and to do your own thinking. Don’t take this as a recommendation to buy iron or potash miners. Commodity prices do not skyrocket forever.