Portfolio Update: Reshuffling the Deck (September 01, 2017)

by FI Fighter on September 1, 2017

in Lithium, Lithium Updates, Precious Metals, Precious Metals Updates

Lots more activity again this week!

Here’s what we got for the week ending on September 01, 2017.

  • Sold 91,000 shares of GoldQuest Mining (GDQMF) @ $0.30/share
  • Bought 50,000 shares of Pure Gold Mining (NSU) @ $0.508/share
  • Bought 15,000 shares of Pure Gold Mining (PGM.V) @ C$0.59/share
  • Sold 5,000 shares of Teranga Gold (TGZ.TO) @ C$3.47/share
  • Bought 12,500 shares of Dolly Varden Silver (DV.V) @ C$0.73/share 
  • Bought 50,000 shares of Birimian Limited (BGS.AX) @ A$0.35/share 
  • Bought 60,000 shares of Birimian Limited (BGS.AX) @ A$0.33/share 
  • Bought 550 shares of Klondex Mines (KLDX) @ $3.17/share 
  • Sold 4,700 shares of Teranga Gold (TGZ.TO) @ C$3.56/share
  • Bought 23,000 shares of Marathon Gold (MOZ.TO) @ C$1.05/share 

GoldQuest Mining

Sell first, ask questions later.

That’s sort of a new motto I’ve adopted with risk assessment in the mining sector. I strongly feel like these “investments” are ticking time bombs that can blow up on you at any given moment. As such, whenever I have reasons to doubt something, I’m trying my best to reduce risks as much as possible.

GoldQuest Mining (GDQMF/GQC.V) has been and still is one of my favorite developers in the gold space.

Unfortunately, the company operates out in the Dominican Republic (a lovely country), which is probably not the easiest place in the world to obtain permits to build a gold mine.

When GoldQuest put out this following press release, it raised red flags in my eyes.

From Market Wired.

No, not a “fatal flaw”, but I’m just worried the whole process of getting an exploitation concession will drag out and prevent the company from rapidly moving their Romero project forward into construction. Eventually, I do believe GoldQuest will be granted a mining and environmental license because there’s too much money at stake for the government to walk away from entirely, but in the short-term, I thought this stock had potential to be “trapped” capital, so I decided to liquidate the bulk of my position.

I still own 67,500 shares of GoldQuest, so I’ve certainly got skin in the game. But I’m not quite as exposed as I was previously…

Why keep holding onto shares?

I think the district scale land package and existing exploration prospect at Cachimbo are too great to exit out completely.

So, I’m still here…

Pure Gold Mining

I used the GoldQuest proceeds to establish a new position in Pure Gold Mining (PGM.V/LRTNF).

Pure Gold is a pretty advanced stage developer in the gold space, but for some reason it’s kind of flying under the radar and not as readily followed by investors for whatever reason. The company’s Madsen project is located in Red Lake, which is prime Canadian jurisdiction for high grade gold discoveries.

Here’s why I’m particularly interested in Pure Gold these days…

An astounding 48% increase in Indicated ounces to the resource!

From Pure Gold Mining.

I like deep value plays. In the gold space, one way to try and find that is to focus on things such as sunk costs. In the case of Pure Gold, investors getting into the story today are able to buy the entire company for ~C$115 million and you get over C$200 million of existing infrastructure that was spent on somebody else’s dime…

From Pure Gold Mining.

Because Pure Gold already has a mill, shaft, tailings pond, portal and decline, etc. already in place, I can’t imagine the initial CAPEX needed to put the mine back into production being too exorbitant. So, whether Pure Gold ends up going mining themselves, or they try and find a buyer for their project, low CAPEX and a short timeframe to get to first gold pour will always have immense appeal.

The Preliminary Economic Assessment (PEA) published in 2016 showed an initial CAPEX of only $20 million, which is next to peanuts considering the fact that most development stage gold projects run in the order of a few hundred million dollars…

From Pure Gold Mining.

Although the initial PEA showed a relatively modest after-tax NPV (5% discount rate) of just C$76 million and production figures of 58k oz/year, I wouldn’t take those numbers too seriously since this study is already outdated and basically obsolete… The company has upgraded their resource significantly, as mentioned above, and shown again below.

With 1.648 million ounces in Indicated and an additional 178k ounces in Inferred, I have no doubts that Pure Gold will eventually get to over 2 million ounces and ultimately be able to increase their annual production to 100k/year with a life of mine over 10+ years.

Importantly, we are also talking about exceptionally high grade gold ounces too!

So yeah, I quickly found a developer replacement for GoldQuest that also has a ton of upside potential, is attractively priced, and most important of all located in a premiere jurisdiction where mine permitting shouldn’t be an issue at all (Madsen was a past producing mine for crying out loud).

Teranga Gold

I started selling down shares of Teranga Gold (TGZ.TO/TGCDF) this week as the share price has risen sharply thanks to the rebound in gold prices.

Shares of TGZ.TO were down on Friday, but up over 15% on the week.

Although I think Teranga still represents tremendous value at its current valuation, it’s a mature mid-tier producer, and thus the upside potential probably isn’t as potent as some of the smaller developers/explorers.

I sold a good chunk of Teranga shares and used the proceeds to fund the following investments…

Dolly Varden Silver

Dolly Varden Silver (DV.V/DOLLF) is an early stage silver explorer that keeps on making new discoveries in their 2017 drilling program.

As a consequence, the share price of DV.V has been on a nice uptrend in recent weeks.

That’s of course music to my ears…

From Dolly Varden Silver.

If this precious metals bull market really is resuming course, we all know that silver will outperform gold on the way up… So, that should mean silver stocks will outpace gold stocks too, right?

My guess would be probably (although nothing is ever for certain).

So, yeah, of course I’m on the hunt for more silver shares…

There are lots of options out there, but Dolly Varden has probably got to be my favorite silver play at the moment.

As such, it was a pretty easy decision to swap some shares of Teranga Gold for some more Dolly Varden.

Birimian Limited

Guess who’s back? Back again?

Birimian Limited (BGS.AX/EEYMF) is back after serving close to four months in a trading suspension!

Wow, what a loooooong time it’s been since we last traded in May! Since that time, many lithium juniors have gone on absolute tears, spiking to 52 week/all-time highs; companies such as Critical Elements (CRE.V/CRECF) and AVZ Minerals (AVZ.AX) have been exceptional performers so far in 2017.

At ~$60 million market cap, Birimian Limited is still deeply undervalued relative to its peers, so on Day 1 of re-listing, I decided to add a bunch more shares… When the share price dipped later that evening, I loaded up again for a second tranche.

Birimian Limited is my largest individual holding by a country mile; I now own 630,000 shares of BGS.AX + EEYMF.

Call me insane, or maybe I’m an idiot, but I really believe in this lithium story…

Klondex Mines

Klondex Mines (KLDX) is a mid-tier gold producer I like a lot since all their operations are located in safe jurisdictions (Nevada and Manitoba). I had some spare funds available in a US based account that charges an arm and a leg to make purchases on the OTC market…

So, I decided if I was going to buy something on the NYSE, I should stick to a name that I thought still provided some deep value. In a rising gold price environment with gold north of $1,300/oz, I really like the Klondex Mines story more and more. Klondex isn’t one of the lowest cost producers in the sector, but at $1,300/oz gold and above, I’m confident the company will be able to generate plenty of free cash flow and still be able to aggressively fund exploration to continue proving up reserves.

Marathon Gold

I used up the remainder of the Teranga funds and some additional capital to initiate yet another new position this week. My last trade on Friday was to purchase up shares of Marathon Gold (MOZ.TO/MGDPF).

Just like in the case of Pure Gold, yup, I went after a developer located in a safe jurisdiction yet again.

This time in Newfoundland.

Yes, go Canada.

District scale potential with 4 deposits currently defined across a 20 km long trend.

From Marathon Gold.

The more I research this company, the more I like it.

It really checks off a lot of boxes…

First off, there’s still a ton of room to grow the resource/reserves. Check out this most recent press release, highlighting 2.13 g/t over 326 meters!

From Marathon Gold.

Obviously, as readers well know, I’m no geologist and I really don’t know jack shit about them rocks…

And of course you should never take headline numbers published by a company as truth (always be a skeptic), but for the most part, I’m hearing mostly good things about Marathon Gold and the company’s exploration potential from people much smarter than myself who actually know what they are talking about…

Marathon is an exciting story since there’s still so much room and potential to expand what is already a pretty good sized resource. Just looking at the open pit resource alone for the Valentine Gold Project and we’re already closing in on 2 million ounces.

From Marathon Gold.

The company is well financed with ~C$20 million in the bank and is currently embarking on an aggressive 60,000 meter drill program with 4 drill rigs on site drilling 24/7.

There is visible gold down to 1,000 meters depth (so far), which has the potential to add a lot more ounces to the total resource over time (and in a hurry)… Right now, I have pretty much zero interest in the underground mining scenario since I’m more focused on the straightforward/simple/cheaper open pit (hopefully heap leach viable) scenario, but whatever discoveries are made to grow the resource underground can only be seen as a positive for the company.

Here is the underground resource that is currently defined.

From Marathon Gold.

An updated resource will be published later this year and the initial PEA in currently scheduled for completion in Q4. Who knows, this might end up developing into a 3-5 million gold system with continued successful drilling and extensions/continuity at depth, which would be mightily impressive…

It’s still early days… and I certainly see lots of blue sky potential here…

Also, with Marathon Gold, I’m really digging the insider buying… many of these purchases are quite hefty tranches too!

From CEO.CA.

So yeah, like I said at the beginning, there’s a lot to like with the Marathon Gold story.

I may look to add even more shares next week, or sometime in the future…

In terms of overall deep value, I think at present day Pure Gold Mining takes the cake b/c its Madsen project is a little bit more advanced stage than Valentine Lake and there is so much existing infrastructure already in place at Madsen. However, longer-term, I definitely see much more exploration potential with Valentine Lake (Madsen is probably closer to being maxed out), so I think that the relative premium shares of MOZ.TO/MGDPF are getting over PGM.V/LRTNF from the market is more than justified.

Quite frankly, at these price levels and with gold now trading above $1,320/oz, I think both Pure Gold and Marathon Gold are high quality plays that are still attractively priced.

Conclusion

I made way too many moves this week… sigh…

But hey, this game is dynamic and I guess I just have way too much free time… I keep finding things to tweak for some reason…

Here’s where things stand at the conclusion of today…

We are again back over $1 million, so that’s good to see…

 

Knowing me, yeah, you can probably expect a few more moves next week… Just from a quick glance above, I’m already finding some more modifications I want to make…

 

Until next time…

 

Fight On!

{ 3 comments… read them below or add one }

1 Midwestern LandlordNo Gravatar September 2, 2017 at 6:19 am

That portfolio just keeps growing and growing. Nice job. Who said you can’t time the market?

It’s awesome how far you have come in just a few short years.

Reply

2 PatNo Gravatar September 2, 2017 at 1:08 pm

Hi fi fighter

Really enjoy your portfolio updates, and your story.
I have 19000$ to invest and was hoping you could give me your opinion on excelsior mining (min.v) and Ivanhoe (ivn.t), pretty please.

What 2 to 3 stocks would you recommend for a potential profit maximisation in a short to medium term horizon?

Thanks a million
Pat

Reply

3 VinNo Gravatar September 3, 2017 at 2:47 am

Nice shuffle mate! I’m thinking about adding another tranche of 10k x Sandspring here. With this gold break out this optionality play seems on to break out as well. You still haven’t added Silvercorp? 😉

Reply

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