Portfolio Update: Reshuffling the Deck (August 25, 2017)

by FI Fighter on August 26, 2017

in Copper, Copper Update, Lithium, Lithium Updates, Precious Metals, Precious Metals Updates

Lots of activity this week!

Here’s what we got for the week ending on August 25, 2017.

  • Sold 400,000 shares of AVZ Minerals (AVZ.AX) @ A$0.16/share
  • Bought 2,400 shares of Nevsun Resources (NSU) @ $2.06/share
  • Sold 6,000 shares of Critical Elements (CRECF) @ $1.36/share (~C$1.70/share)
  • Bought 8,000 shares of Balmoral Resources (BALMF) @ $0.482/share (~C$0.60/share)
  • Bought 7,000 shares of Almaden Minerals (AAU) @ $1.10/share 
  • Bought 20,000 shares of Garibaldi Resources (GGI.V) @ C$0.712/share 

AVZ Minerals

Buy low and sell high.

AVZ Minerals (AVZ.AX) is one of the top performing stocks this year and I was tremendously lucky to get into the story relatively early (my first buy was at A$0.042/share). Prior to the release of the second set of drill holes, the stock kind of got ahead of itself and somehow made it up into the A$0.16/share range.

As I alway stress on this blog, mining stocks are beyond volatile and you’ve always got to have one foot out the door, no matter how great and prospective a story is…

You’ve got to protect your downside at all costs, and one of the best strategies that I know of to do that is to try and recoup back all (or the bulk) of your initial investment capital as soon as possible.

In my own case, I sold 1/3 of my AVZ shares, and now only have ~$7,300 USD of my own “skin” in the game… Not quite fully de-risked, but my new cost basis is ~A$0.011/share, which is not bad!

Congo is a scary ass place, don’t invest there!

The logistics suck! Good luck figuring out an economical way to get the products to port!

They’ll never be able to build a mine themselves or find a buyer willing to pay top dollar!

Etc.

All very real and noteworthy concerns (with some perhaps diminishing more and more by the day), but straight up everyone, it’s a lot easier to balance out the fear when you’ve got most/all of your chips back out.

I still own 800,000 shares of AVZ.AX, but now I can sleep much easier at night letting this position do its thang…

Nevsun Resources

Nevsun Resources (NSU) has an exciting development project in Timok, which I discussed last time around, but due to operating issues at Bisha, the share price has been depressed in recent weeks.

I used the drop on Monday down to $2.06/share to add some more NSU shares to my position.

Nevsun is one of my investment vehicles to play the rebound in copper prices, which now sit at a robust $3.00/lb.

I don’t expect any type of quick gains with NSU at all, no, this story is one of those “buy and hold rentals” that you’re going to need to be patient with in order to see any kind of meaningful gains… My own time horizon is to not expect a significant uptick until like 2-3 years down the road…

It’s a boring stock, which is perfect for a boring guy like me.

Critical Elements

Buy low and sell high.

Critical Elements (CRE.V/CRECF) has been on fire this year and the bullish trend continued to exert itself again this past week.

I’ve been slowly easing my way out of this stock as it’s re-rated…

I sold some shares of Critical Elements at C$0.89/share, C$1.22/share, C$1.45/share, and now C$1.70/share

Over the years, I’ve gotten so much flak from critics who keep scolding me about how you can’t time the markets and blah, blah, blah..

No, I never said I could perfectly catch the tops and bottoms…

 

Essentially, all that I’ve ever said is:

Buy low and sell high.

 

So, I’ve been “dollar-cost averaging” my sales on the way up…

 

Obviously, with the benefit of hindsight, I sold many shares of CRE.V/CRECF way too early, but hey, this game is tough, give me a break…

 

I still own 65,000 shares of Critical Elements but more importantly pulled out my original investment capital a long time ago… This is the house’s money that I’m playing with, and similar to the case of AVZ Minerals, it lets me sleep well at night.

Balmoral Resources and Almaden Minerals

Buy low and sell high.

I used the proceeds from Critical Elements to purchase some beaten up and battered gold miners that are trading a lot closer to their 52 week lows than their 52 week highs…

I added shares of Balmoral Resources (BAR.TO/BALMF).

And Almaden Minerals (AAU).

I see great value in both these stocks, but quite frankly at this stage of the game, these stories are more “beta” plays than anything else… In other words, Balmoral and Almaden are NOT exciting growth stories even though in the case of Balmoral it should still be considered relatively exciting early-stage exploration; Almaden is a pretty advanced stage developer so the apathy towards this stock is much more understandable.

Really, regardless of how good the news flow coming out from these companies is, the market just won’t care about them right now… The catalyst for these stocks to surge a lot higher from here is a much higher gold price, which is why I’m calling these stocks “beta” plays.

“Alpha” plays will re-rate significantly with drill results (e.g. AVZ Minerals) since the market is currently perceiving them as having added a lot more value, but as we all know, market behavior is peculiar at times…

Balmoral has made new discoveries with each drill program, and in the past this company was a market darling… The lack of a published resource for the gold project after so many years, I think, is the cause of the current apathy and disinterest…

Anyway, hopefully market sentiment will improve for these stocks in the near future… I’m a patient guy, so I’ll gladly accumulate around these levels and hold tight.

Garibaldi Resources

Buy low and sell high.

In the case of Garibaldi Resources (GGI.V/GGIFF)…

Hahahahahaha…

 

There I go violating the first rule of Fight Club Investing.

Shares of GGI.V are up 477.8% year-to-date… and the party might just be getting started!

 

Shit, I got some explaining to do buying a stock that’s going straight vertical and sitting at 52 week highs!

 

Everyone, I have a serious weakness/problem I must confess to… In the world of mining stocks, whenever anyone utters the words “Voisey’s Bay“, I get all emotional, delusional, cray cray, and I lose my mind…

 

The gambler in me comes out in full force, and I just can’t resist…

 

Last year, I got burned badly at the stake with my speculative bet on Northern Shield Resources (NRN.V), booking losses of $8,722.17.

Here’s a cut and paste excerpt from that article above basically explaining why finding the next Voisey’s Bay is really such a big deal…

From Visual Capitalist.

Finally on March 26th 1996, Inco announced a takeover bid of its own for $4.5 billion of Diamond Fields – the equivalent of $43.50 per share or $174 pre-split. Inco’s stock price dropped but it held on, making the total value of the deal closer to $4.3 billion. On April 3, the deal was officially signed by all parties.

dfi-stock3

So, seriously, who wouldn’t want to find the next Voisey’s Bay/Diamond Fields???

 

Well, it looks like with enough time, I eventually found a way to get over that painful loss I experienced with Northern Shield Resources and here I am today being enticed by yet another “dangerous” high risk/but even higher potential return kind of proposition in Garibaldi Resources.

Garibaldi is currently drilling into their E&L project, “Nickel Mountain”, in the Golden Triangle of British Columbia.

From Garibaldi Resources.

I’m not a geo, but apparently massive nickel sulphides are the holy grail if you’re looking for the next Voisey’s Bay

This is the next place to explore,” explained why in the following video with Garibaldi’s VP of Exploration, Everett Makela …

We should know sometime early next week (maybe Monday?) if Garibaldi hits or not with the first drill hole that’s punching through Anomaly D as we speak…

Umm, what I’m hearing is the company will know soon enough whether they hit or not b/c with massive nickel sulphides, you don’t need to wait for lab assays to know that you’ve hit paydirt.

You’ll see glittering yellow on the surface, which looks like gold…

From Garibaldi Resources.

 

This will be a total game changer for the mining sector if a major new discovery is made here.

 

If the upside potential wasn’t so astronomical, no way would I risk losing 70% or more of my investment capital on a speculative bet (no matter how robust and solid the science behind a prospect is the bottom line is that the drill bit is the truth machine that we need to confirm a thesis).

But speaking of science, here’s some “nerd talk” for you from world renowned nickel expert Peter Lightfoot (who joined the Garibaldi Resources’ Advisory Board back in March).

Dr. Lightfoot was part of the exploration team that later went on to discover Voisey’s Bay

Hmmmmmm…

And there is a lot of chatter on the streets that the boys are trying to get the ol’ band back together again here at Garibaldi… Lots of rumors of some big shot figures participating in the latest private placement as well

So, I bought some lottery tickets… No, I didn’t go too overboard with my gamble, only taking on ~1% position (relative to the rest of my mining portfolio) in shares of Garibaldi Resources.

 

All will be revealed shortly…

 

Exciting times!

Conclusion

For the most part, I tried to:

 

Buy low and sell high.

 

I feel like I did that by selling out of some shares in my AVZ Minerals and Critical Elements positions, and using the proceeds to buy Nevsun Resources, Balmoral Resources, and Almaden Minerals.

With Garibaldi Resources, yeah, I’m breaking all the rules and pigging out on a hot fudge sundae with all the fixins…

Oh well, it’s ultimately about risk management… but also making sure to have some fun along the way as well. Life’s too short, as we all know but tend to forget a lot of the times.

Here’s where we stand today.

Not quite $1 million anymore, but it’s all good since I converted a lot of my AVZ.AX profits into cold hard cash that I’m sitting on…

 

Until next time!

 

Happy Hunting!

{ 5 comments… read them below or add one }

1 VinNo Gravatar August 26, 2017 at 11:37 pm

Good picks mate! I have looked at Garibaldi Resources in the past, so let me have another look..

With the gold/silver ratio seemingly breaking down, I have added BCM this week (@ 2,11) and AMM (@ 1,40). Let’s see what happens..

Reply

2 FI FighterNo Gravatar August 26, 2017 at 11:41 pm

Vin,

Nice additions there! I’m personally eyeing Excellon Resources (EXN.TO), Almaden (AAU), and Silvercorp (SVM) for silver. Will look to add on any meaningful dips.

This correction has gone on for long enough, it’s time for some explosive gains! 🙂

Let’s see what happens…

All the best!

Reply

3 VinNo Gravatar August 27, 2017 at 1:18 am

Personally I wouldn’t mind to stay a little longer in this consolidation phase so I can buy more on the cheap 😉

Silvercorp (SVM) is my largest holding so that would be a great addition in my humble opinion. Especially considering their 30% stake in New Pacific Metals Corp (TSX-V: NUAG) and their newly acquired Bolivian project.

Last time I checked, not a big fan of Excellon Resources (EXN.TO). Very high grades, and the company loves to emphasize that, but low current resources and short LOM. Haven’t looked at their exploration though, so I might have to take a second look..

Cheers!

Reply

4 FI FighterNo Gravatar August 27, 2017 at 10:24 am

Excellon is backed by Eric Sprott and I like how he typically swallows up a ton of shares on the open market whenever share prices are weak in the companies he owns. With the dewatering now complete, production should 2x and costs are expected to come down to $9 AISC. There should still be lots of room to expand and grow the resource with further exploration.

Silvercorp has some of the best margins for silver producers out there and is a very underfollowed company due to the China factor which puts off a lot of investors. I like the risk vs. reward with this one.

Cheers!

Reply

5 VinNo Gravatar August 28, 2017 at 7:22 am

Thanks for the notes on Excellon! I’ll definitely revisit this story.

Cheers mate!

Reply

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