Portfolio Update: Reshuffling the Deck (September 22, 2017)

by FI Fighter on September 22, 2017

in Precious Metals, Precious Metals Updates

I’m currently in Arizona, but even though I’m hiking a lot (made it out to Grand Canyon South Rim today), I’m still making time to follow the markets in the early mornings.

Here’s what we got for the week ending on September 22, 2017.

  • Sold 8,900 shares of Klondex Mines (KLDX) @ $3.60/share
  • Sold 25,000 shares of Hummingbird Resources (HUMRF) @ $0.47/share
  • Bought 19,500 shares of Northern Empire Resources (PSPGF) @ $0.6115/share
  • Sold 13,500 shares of Sandspring Resources (SSPXF) @ $0.275/share
  • Sold 1,140 shares of Endeavour Mining (EDVMF) @ $19.45/share 
  • Sold 13,500 shares of Sandspring Resources (SSPXF) @ $0.270/share 
  • Bought 42,000 shares of Erdene Resources (ERDCF) @ $0.6114/share 

Klondex Mines

I sold out of my position in Klondex Mines (KLDX) this week. I still really like the company and feel like it’s one of the better run mid-tier gold producers out there, but I needed cash to fund some other ideas (which hopefully will be completed soon and I can get into specific details for everyone).

My funds are limited, and I can’t own all dem stocks, unfortunately.

Hummingbird Resources

Hummingbird Resources (HUM.L/HUMRF) is a near term gold producer that is still flying under the radar of most investors. I picked up a large position at the beginning of this year, and shares have done extremely well since then.

Shares of HUMRF are up an impressive 90.44% year-to-date.

I decided to sell 25% of my HUMRF position to reduce my cost basis (de-risk) and to book some profits. I still think Hummingbird has room to run, but much of the re-rating has already taken place.

Down the road, I will look to dollar cost average (DCA) up and out of my position (slowly but surely), hopefully selling each future tranche at higher and higher prices.

Northern Empire Resources

I used the proceeds from the HUMRF sale to add to my Northern Empire Resources (NM.V/PSPGF) position. Since I exited out of Klondex Mines, I thought it wouldn’t be a bad idea to add shares of a smaller company (also based in Nevada), with perhaps a bit more upside growth potential.

Northern Empire Resources is another one of those obscure gold companies that I feel has a lot of potential to outperform in a precious metals bull market.

In a nutshell — Top notch management team, great jurisdiction, existing infrastructure in place, high-grade gold and excellent recoveries…

Northern Empire just simply has to find a lot more gold ounces now. I believe that the company will, in time, and they are already starting out with a very solid base.

From Northern Empire Resources.

We shall see… At this market cap, I’m a buyer.

Sandspring Resources and Endeavour Mining

I continued to reshuffle the deck today and sold some shares of Sandspring Resources (SSP.V/SSPXF) and exited out of my position in Endeavour Mining (EDV.TO/EDVMF) entirely.

Sandspring Resources announced a financing deal earlier this week, which unfortunately for retail investors wasn’t on the most advantageous terms (C$0.35/share with full warrants good for 5 years that are exercisable at C$0.50/share).

OUCH!

So, I do see shares of Sandspring Resources stagnating for awhile due to the terms of the deal (unless we catch fire of a raging bull market in precious metals again).

I decided to trim a bit, although I only got a partial fill on my sell order. Assuming the share price can recover a bit next week, I should be in line to liquidate more shares of my SSPXF holding. My plan is to hopefully get into the private placement… If so, that would be awesome, obviously… If not, I have no problems saying goodbye and moving on to other ideas…

In the case of Endeavour Mining, I made the decision last week to sell out (despite the wonderful news release on the Optimization Study for the Ity CIL Project). Endeavour Mining has to seriously be one of the finest mid-tier gold producers out there, and I didn’t want to sell at all…

This company is firing on all cylinders…

But I needed capital to fund the following idea…

Erdene Resources

I discussed Erdene Resources (ERD.TO/ERDCF) briefly in the video that I uploaded last week… So, I guess you could say the writing was on the wall with this move (I basically telegraphed what I was going to do).

I’ve been watching Erdene Resources for awhile, but the share price was always slightly higher than what I wanted to pay… But as usual, if you give the market enough time, it will eventually get bored of a story (regardless of how much progress is being made and even if fundamentals are actually improving). When the market says “yawn”, I start to pay close attention!

Right now, I think it’s safe to say the market really isn’t a fan of Erdene Resources…

I see district scale potential in a prospective region (Mongolia) that is very much underexplored… which is of course very exciting stuff.

From Erdene Resources.

Granted, Mongolia isn’t everyone’s favorite jurisdiction, but I have pretty high risk tolerance and I like to venture off into “new frontiers”…

To learn more, please check out this great video produced by Erdene Resources.

Shares of ERD.TO peaked at C$1.40/share earlier this year, so yeah, you can say we’ve witnessed quite the pullback… At sub C$0.80/share, I see a lot of value here…

So, I finally stepped up to the plate and initiated a position in Erdene Resources.

Summary

Just a few moves this week, which is an improvement for a crazy trader like myself (maybe?). I closed out my position in Klondex Mines and Endeavour Mining. I used the proceeds from the Endeavour Mining sale to initiate a position in Erdene Resources. Also, I booked some profits with Hummingbird Resources and parlayed those gains to add more shares of Northern Empire Resources. Lastly, I began selling down shares of Sandspring Resources, with the intent of hopefully being able to participate in the private placement (which will allow me the opportunity to buy back my shares and also obtain the full 5 year warrants)… We shall see how that goes.

Here’s where things currently stand…

It’s been a fun week with lots of hiking… I’ve got plans to return to the Grand Canyon again tomorrow morning.

 

Until next time…

 

Fight On!

{ 6 comments… read them below or add one }

1 VinNo Gravatar September 22, 2017 at 9:02 pm

Interesting moves mate.. I have been watching Erdene for a while now but I’ve never pulled the trigger because of this:

“The 10 least attractive jurisdictions for investment based on the PPI rankings (starting with the worst) are Venezuela, Afghanistan, Zimbabwe, Mongolia, Philippines, Indonesia, Chubut, South Sudan, Mendoza, and Ecuador. Venezuela, Zimbabwe, and Chubut were all in the bottom 10 jurisdictions last year. Two out of the 10 lowest-rated jurisdictions based on policy were Argentinian provinces.”

Source: https://www.fraserinstitute.org/studies/annual-survey-of-mining-companies-2016

I’m a risk taker as well, but personally that’s just a bit too much for me.

Care to share the process of how to participate in the Sandspring pp? Perhaps a good topic for a videoblog? 😉 Enjoy your trip! Cheers from sunny Sydney (33 degrees today..)!

Reply

2 FI FighterNo Gravatar September 23, 2017 at 8:47 am

Vin,

Thanks for sharing the link! I do tend to follow the rankings of Fraser Institute closely, and in general try and make sure a bulk of my portfolio is invested in the best/safest jurisdictions.

In regards to Mongolia, there are certainly risks, but in terms of prospectively, there are few regions in the world with as much untapped potential. Since Erdene is an explorer/developer, I would tend to believe (perhaps I’m wrong here to make this assumption) that fears of the government seizing/nationalizing the assets would be low, and this most likely isn’t a stock I would hold into production anyway.

The country as a whole is very dependent on mining and this recent piece is encouarging:

https://www.cnbc.com/2017/05/23/miners-ready-for-new-mongolia-boom-with-one-fifth-of-the-country-to-be-opened-for-digging.html

“It is an important thing for Mongolia as a whole. I think the reaction and the commitment you are seeing from the Mongolian government over the last two weeks to repeal this tax, it shows its firm commitment to really get the foreign investments going and particularly that is very much settled on the mineral exploration and the mining industry in Mongolia”, Stewart said.

In any case, this will be a fluid situation and investors taking risks into regions such as Mongolia need to follow developing news regularly.

I own a decent sized position in Erdene, but it’s not quite as large as my stake in Canadian companies such as Pure Gold, Marathon, etc.

In regards to Sandspring private placement, I emailed the company directly and a friend also sent an introduction to management. I received a reply but at this point can’t confirm that I am on the list and can participate. Will keep readers updated as I learn more!

Cheers!

Reply

3 JoNo Gravatar September 22, 2017 at 10:27 pm

Hey Jay,

Congrats on all your success! Just wondering if there are any methods for reducing tax on your profits that you’ll be following?

Cheers

Reply

4 FI FighterNo Gravatar September 23, 2017 at 8:50 am

Jo,

To reduce taxes, I try and limit any excessive trading to retirement accounts. For taxable accounts, in the United States, I try to hold any big winners for at least 1 full year to reduce taxes to long-term capital gains (15%).

Cheers!

Reply

5 JCNo Gravatar September 22, 2017 at 11:20 pm

Hey Jay, when you mentioned about hopefully participating in the private placement warrants offered by Sandspring – would that kind of offering only be given to existing (large) shareholders of the company in your opinion, or how do those offers typically work?

Reply

6 FI FighterNo Gravatar September 23, 2017 at 8:52 am

JC,

I believe the offering is only available to accredited investors, but if you qualify, anyone can participate. I think the best thing to do would be to email the company directly and let them know your interest. I emailed Sandspring last weekend and received a response on the day of the offering.

info@sandspringresources.com

All the best!

Reply

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