Portfolio Update: Reshuffling the Deck (December 8, 2017)

by FI Fighter on December 9, 2017

in Mining Stocks, Reshuffle

Here’s an update on my latest trades for the week ending on December 8, 2017.

  • SOLD 20,000 shares of Bear Creek Mining (BCM.V) @ C$2.07/share  
  • Bought 15,000 shares of Erdene Resources (ERD.TO) @ C$0.48/share 
  • SOLD 100,000 shares of AVZ Minerals (AVZ.AX) @ A$0.22/share  
  • Bought 85,000 shares of Nzuri Copper (NZC.AX) @ A$0.265/share 
  • Bought 10,000 shares of Almaden Minerals (AMM.TO) @ C$0.99/share 

Bear Creek Mining

So, silver has been getting slaughtered lately by the market, which made me reflect on my portfolio holdings quite a bit.

Straight up, I don’t feel comfortable (or confident) in holding onto optionality plays such as Bear Creek Mining (BCM.V/BCEKF) in a period of extreme spot price weakness.

I was hoping to hold off on selling until 2018, but with the final decision on the Santa Anna arbitration being announced this past week (final settlement is a “minuscule” $30.4 million awarded to Bear Creek), I thought I just had to get out now (I was expecting a better outcome, personally)…

With a market cap north of C$200 million, Bear Creek Mining certainly isn’t “cheap”.

Bear Creek’s Corani project is large in size but it’s low grade, and the CAPEX needed to put Corani into production is quite substantial at just shy of $600 million; the odds of Corani becoming a mine at today’s silver price is near 0% right now imho… which is what worried me the most and caused me to liquidate out of my shares of BCM.V.

From Bear Creek Mining.

Again, realistically speaking, with the spot price of silver so depressed these days, I’m having a very difficult time envisioning any kind of production scenario where it would make sense for a low grade/high CAPEX project like Corani to get the green light for construction (or get taken over by a major). I realize that many investors are interested in stories like Bear Creek because of the enormous amount of leverage it should provide (in theory) to a rapidly advancing silver price…

But let’s try and be reasonable here…

Silver is down in the dumps and no one knows exactly when the sector will recover… From a Risk/Reward angle, I’m just not fond of holding onto too many shares of companies with marginal projects…

The downside risks are too great in my eyes…

So, I’m out of Bear Creek, for now…

Erdene Resources

One of the best value plays available in the gold space that I can find right now is Erdene Resources (ERD.TO/ERDCF). As readers may be aware, I’ve been dollar-cost averaging (DCA) into Erdene over the last few months now, and the stock seems content to do nothing more than to keep sliding down further still…

So, this past week, I bit the bullet and added some more shares of ERD.TO yet again…

I now own 105,000 shares of Erdene Resources (ERD.TO + ERDCF).

I keep thinking I’m done buying, but this time, I really do hope that the lows are behind us…

AVZ Minerals

AVZ Minerals (AVZ.AX) was a market darling this past summer, but it looks like this lithium stock has started to fall out of favor with the market…

The near-term technicals look pretty bad for AVZ, and it’s going to be a little while longer before we can expect drill results back that could re-ignite investor interest again…

I do believe that shares of AVZ Minerals got ahead of itself, and many speculators were anticipating a takeover by year end… Although anything is still possible, the market has sold off and is pricing in a low probability of any kind of transaction happening anytime soon…

I sold another tranche of AVZ.AX as I needed some additional capital to fund the following idea…

Nzuri Copper

Nzuri Copper (NZC.AX) is sleeping no more… What has been a promising and prospective cobalt story for quite some time now is finally catching the attention of investors and the share price of NZC.AX has been on a roll lately!

Although I like to DCA down and attempt to “buy low” much of the time, I don’t take a binary approach with my speculations and there are many instances where I like to DCA up… and don’t mind doing it either…

This week’s purchase of more NZC.AX shares represents my third tranche… Each time, I’ve increased my cost basis…

I now own 235,000 shares of Nzuri Copper, but with the benefit of hindsight, I’m now seeing quite clearly that I was not aggressive enough with this particular stock; I should have bought a lot more at much lower prices when I had that wonderful opportunity.

Unlike many wannabe cobalt stories out there, Nzuri is one that I actually believe has the goods to make it all the way through to commercial production.

Sure, I wish I owned more shares, of course, but for all intents and purposes, I’m now mostly lock and loaded with Nzuri Copper and ready for shares to rip a lot higher from here… I’m hoping 2018 will be a spectacular year for cobalt stocks, and NZC.AX, in particular.

Almaden Minerals

Yup, I’m out of Bear Creek Mining, but by no means am I anti-silver… In fact, after selling out of Bear Creek Mining, I decided to use some of the proceeds to add to my position in Almaden Minerals (AAU/AMM.TO), a really beaten up and battered gold/silver stock.

Similar to Erdene Resources, I don’t see anything immediate obvious on the surface to explain such a drastic selloff in shares of Almaden Resources… The most convenient explanation would be tax-loss selling kicking into overdrive, but nobody knows for certain…

Still, at these prices, I think the Risk/Reward is now heavily skewed in favor of Reward… Almaden has a very robust gold/silver project, even at today’s metals prices, so I’m very content to just hold and wait things out…

I might have one last tranche in me if shares of AAU/AMM.TO sink even lower from here, but we’ll see…

Summary

Just a few more transactions this week. First off, I tried to get out of harm’s way and sold out of my entire position in Bear Creek Mining (which I’ve held since early 2016)… Next, I added more shares of Erdene Resources, one of my favorite explorers/developers… Further, I swapped some shares of AVZ Minerals for Nzuri Copper. Lastly, I loaded up on more shares of Almaden Minerals, a most hated (and neglected) precious metals stock at the moment…

Here’s where things stand now…

Until next time…

 

Fight On!

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