Portfolio Update: Adding to My Best Ideas (September 01, 2016)

by FI Fighter on September 1, 2016

in Lithium, Lithium Updates

Birimian

When it comes to the markets, readers know full well that I think they are frequently wrong in the short-term. Rather than fixate so much on day-to-day price action, my preferred method of investing and speculating is to focus much more on the macro picture and underlying fundamentals.

As I have shared with subscribers since June 15, my current favorite investing ideas remain the same… Critical Elements (CRE.V/CRECF) and Birimian Limited (BGS.AX/EEYMF).

Sent out to subscribers on June 15, 2016.

June 15

Around the blogosphere, I’m known as that crazy blogger who keeps changing with the seasons and cannot ever remain consistent with his investing approach.

Well, perhaps that’s true, but I’m guessing some of the people who feel that way are also the same ones who are getting sick and tired of my same ol’ “favorite ideas”… Surprisingly (or not), my stance has not deviated one bit throughout the summer, and right now (at present time), my favorite ideas remain those same two stocks, CRE.V and BGS.AX.

BGS.AX, in particular, is just totally blowing my mind right now… When I first discovered it (around May timeframe), the stock was trading well over A$0.30/share. In fact, before the company even drilled one freekin’ hole on its Bougouni Lithium Project, the share price peaked on May 16 at A$0.42/share, as it was elevated upwards thanks to all the lithium hype that was present earlier this year (thank you Elon Musk and Tesla Model 3!)…

Well, it’s safe to say that the short-term fever pitch in lithium has since expired… and most investors just aren’t interested or paying attention to the lithium story anymore…

That’s too bad… Well, unless you are a buyer who is adept at tuning out all the noise (and garbage) out there… When the markets are snoozing, that’s usually your cue to go bargain hunting!

With BGS.AX, shares have remained stagnant, despite the fact that the company has continued to make tremendous progress with regards to their lithium project.

Looking back, after the first positive drill results were released on July 12, the share price of BGS.AX closed the day at A$0.32/share on the back of just the initial seven Reverse Circulation (RC) drill holes.

Screen Shot 2016-09-02 at 9.17.35 AM

At the time, the company had just started drilling the Main Zone of the Goulamina deposit, and although there were targets marked for drilling at the West Zone, it was anyone’s guess if anything significant was going to be found there…

Screen Shot 2016-09-02 at 9.17.22 AM

And with early-stage exploration stories, it of course makes sense for the market to wait for more results before giving shares a re-rating…

At the conclusion of July 12, the Main Zone had delivered some promising initial results, but for the most part, there were still many question marks that needed more pending assay results to address…

OK, fair enough…

But fast forward to today, and most recently, on August 31, Birimian made the following announcement.

Screen Shot 2016-09-02 at 9.25.47 AM

Drilling has since progressed from those initial seven RC drill holes to this…

Screen Shot 2016-09-02 at 9.26.52 AM

Not only does the Main Zone continue to prove prospective, but the West Zone, which was kind of always deemed “icing on the cake”, or “freebie” should now help the company to easily smash their initial (and conservative) exploration target of 15-18Mt.

We’ve got “Twin Towers” in the making, and the “twin” is starting to look even better…

Screen Shot 2016-09-02 at 4.19.52 PM

And don’t forget the high-grade, which is head and shoulders above what most of the other lithium hard rock peers are bringing to the space.

The following slide is outdated (from a resource size perspective), but you get the idea, anyway…

High Grade

High Grade 2

With all this progress, you would have expected shares of BGS.AX to have received a decent market re-rating, right!?!

I mean, even just a little bit for all that progress?

Nope.

Shares of BGS.AX are currently trading at A$0.29/share..

Screen Shot 2016-09-02 at 9.35.30 AM

We have only gone backwards since not only the first set of drill results were released on July 12, but shares are currently trading for even less than when the first hole was punched into the ground!

Fancy that…

Perhaps the markets won’t be convinced until a Scoping Study is released by the company (slated for completion by the end of this year)?

The current market cap of ~A$50 million… is a joke.

What are investors getting with BGS? A spodumene deposit that might one day be classified as “world class”… And let’s not forget the gold processing deal at Morila that is hopefully just around the corner…

So, what I see is this type of proposition (my favorite when I’m a buyer):

  • Risking 50% of your principal to chase after undervalued assets that could realistically and conceivably return 500% gains in the future is a winning proposition!

Anyway, as someone who is a big fan of opportunity, I guess I can only sit back, scratch my head, and chuckle a bit… Mr. Market can act very irrationally at times… But whatever. I’m going to do my best not to look a gift horse in the mouth. So, just the other day, I added 66,000 shares to my BGS.AX position at A$0.31/share.

I purchased shares via OTC route (EEYMF), but the order was routed through the ASX, the native exchange, since shares of EEYMF are so illiquid… If any US investors are interested in the Birimian Limited story, it’s probably a good idea to contact your broker to figure out how the whole process of purchasing illiquid OTC shares works…

Here’s an in-depth article I wrote going over OTC shares… that you might find helpful.

Funny enough, it looks like I’m that “idiot” who has finally moved the needle on the share price of EEYMF! Before my most recent purchase, I had already owned shares of EEYMF, but the “face value” was listed at $0.00.

Screen Shot 2016-09-02 at 9.39.34 AM

Please note – Early-stage exploration stories are inherently high risk and speculative. Please do your own due diligence and research before putting your own investment dollars at risk! As always, I’m only sharing with readers what I am doing with my own money, please don’t mistaken anything I have to say as investment advice!

 

To learn more about BGS.AX, I would seriously start here, at the HotCopper forum.

 

I have a lot of interest in the Birimian story because I think they are onto something special (high grade and large scale spodumene deposit, which are actually quite rare to find)… and I’m a big believer in the macro story of clean energy and electric vehicles…

 

So, right now, I don’t care if the markets are asleep at the wheel… The fact that the Birimian story keeps on getting better and better and the share price keeps doing nothing (or going down) is just fine with me… It’s like being able to buy lottery tickets at face value AFTER they’ve already started to announce some of the winning numbers… Well, if the share price keeps on stagnating and more and more winning numbers keep getting revealed to me, I can only really do one thing… Buy, Buy, Buy…

That’s just my own take… but we’ll see how this all works out in the coming months/years.

 

I’m now up to 266,000 shares of BGS.AX/EEYMF.

 

Happy Hunting!

 

{ 4 comments… read them below or add one }

1 ANo Gravatar September 1, 2016 at 10:07 pm

Hey J,
I recently started following hotcopper forums and it has a ton of information for BGS/PLS which are the two I am following. I was wondering if you follow any other sites for info on CRE. So far I haven’t found anything as large as hotcopper for CRE so havent felt as comfortable going in yet.

BTW Side Topic. Did you sign up for the Chase Sapphire Reserve?

Thanks,
A

Reply

2 FI FighterNo Gravatar September 6, 2016 at 5:44 pm

A,

I’ll write an article regarding CRE in the near future. I’ve got some great videos and info to share for anyone who wants to do more research.

Cheers!

Reply

3 JoeNo Gravatar September 2, 2016 at 9:51 am

Why did you buy via EEYMF rather than BGS.AX since you already have a Global Account to buy directly?

Reply

4 FI FighterNo Gravatar September 6, 2016 at 5:45 pm

Joe,

Any stocks that I own that are OTC are held in retirement accounts. I sold GALXF and used some of the proceeds to purchase EEYMF, held in my 401k.

Otherwise, you are right, under normal circumstances, I would elect to buy on the more liquid ASX, under BGS.AX

Best wishes!

Reply

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