Portfolio Update: Reshuffling the Deck (December 17, 2016)

by FI Fighter on December 16, 2016

in Graphite Updates, Lithium Updates, Precious Metals Updates

The markets hate gold and silver… So, it should come to no surprise to readers that I am paying close attention yet again! Sorry lithium, graphite, cobalt, copper, lead, zinc, etc., but you are getting far more love than the precious metals these days, so until the trend changes, I’m most likely going to remain a “one trick pony” for the foreseeable future…

Here’s an update of all my latest wheelings and dealings…

  • Sold 500 shares of First Majestic Silver (AG) @ $9.45/share
  • Sold 1,000 shares of Klondex Mines (KLDX) @ $5.20/share
  • Bought 8,500 shares of Orca Gold (CANWF)@ $0.24/share (~C$0.32/share)
  • Bought 58,143 shares of Aton Resources (ANLBF) @ $0.049/share (~C$0.065/share)
  • Sold 30,000 shares of Altura Mining (AJM.AX) @ A$0.145/share
  • Bought 31,387 shares of Black Rock Mining (BKT.AX) @ A$0.135/share
  • Bought 10,000 shares of GoldQuest Mining (GDQMF) @ $0.20/share (~C$0.267/share)

 

First off, I trimmed some shares of First Majestic Silver (AG) to reduce my cost basis down to $6.204/share, which right now I’m quite grateful for given the NASTY market environment many of these precious metals mining stocks currently find themselves operating in. Ditto for Klondex Mines (KLDX), which I also sold a partial position, cutting down my cost basis to $1.29/share.

When it comes to these mining stocks, one thing that I’ve learned along the way is that you seriously have to book profits, from time to time… Volatility in this space is just off the charts, and what goes up typically comes crashing back down again, sooner or later… No, I’m not trying to “time the markets” with pinpoint precision and accuracy (an impossible task!), but I see absolutely nothing wrong with making an effort towards taking some chips off the tables, whenever that chance arises… Perhaps it has more to do with investor psychology than anything else, but when you have less “skin in the game” and you’re seeing a bit more green in your portfolio, let’s be real, it just makes grinding out the tough time a tad bit less difficult…

Just sharing my own experience, although your own strategies and thoughts may vary, obviously…

Next up, I used the proceeds from those sales above to add to my position in some earlier stage junior companies, Orca Gold (ORG.V/CANWF) and Aton Resources (AAN.V/ANLBF). I have shared my thoughts on Orca before in the past, but with Aton, I still owe readers a write-up so that you can get the inside scoop as to why I elected to purchase up shares at this time… Moving forward, I would like another opportunity to add another tranche of Orca, but with Aton Resources, I’ll probably hold off buying any more shares until at least the initial resource is released for their Hamama West gold deposit…

Moving along, I finally got around to closing out most of my position in Altura Mining (AJM.AX/ALTAF). I took a loss of -A$3,150.08 (-$2,215.78). In hindsight, Altura was a stock that I definitely did chase up during the lithium boom experienced this past spring/summer (doh!)… As a whole, I still like Altura, and strongly do believe that the company will do well once their Pilgangoora deposit gets put into production… But from a risk vs. reward perspective, I just feel like I can do a lot better right now… The current market cap of Altura is ~A$160 million, and we are talking about a relatively low grade spodumene project here… Obviously, I am a much bigger fan of a company like Birimian Limited (BGS.AX/EEYMF), which is currently the largest holding in my portfolio… and one example of a lithium company that I feel offers much more upside potential than Altura. I’m also not really a fan of holding too many stocks (overall), and my position in Altura was so minuscule, anyway, that I decided to exit out at this time so that I could take advantage of tax-loss selling.

The Altura funds were used to increase my stake in Black Rock Mining (BKT.AX), probably my favorite graphite stock at the moment… As it pertains to Black Rock, we are talking about ultra-high purity natural flake graphite, a very modest market cap of ~A$40 million, and a number of catalysts coming up (e.g. Pre-Fesability Study, binding offtake agreements) that could potentially lead to a rather drastic share price re-rating. If/when the graphite sector comes back in favor, I do believe that Black Rock will be leading the pack (of course this is all assuming there are no surprises in store with the PFS report and binding offtake agreements do get executed sooner rather than later)…

Lastly, I closed out my activities by adding more shares of GoldQuest Mining (GQC.V/GDQMF). The company’s Romero project is pretty mature at this point, so anytime I can add shares of a promising development stage story at ~C$50 million market cap, I’m more than happy to do so. GoldQuest operates out in the Dominican Republic, which is a reasonably good mining jurisdiction, and the management team in place has a track record of success with taking a development stage project all the way through to the finish line (sale to a major producer). Let’s hope lightning can strike once again!

Here is where the portfolio stands today, December 17, 2016.

Given the recent smackdown in gold and silver, here are the stocks that I’m watching most closely right now:

As we speak, I’m most interested in adding more shares of: Orca Gold, GoldQuest Mining, and Teranga Gold (TGZ.TO/TGZ.AX/TGCDF). To a lesser degree, I’m keeping tabs on Avino Silver and Gold Mines (ASM), as anytime I can get into shares of a company at a price significantly below the last private placement offering ($1.57/share), it really don’t get much better than that! The same could be said for Teranga Gold (C$1.05/share), actually… But at this point in time, I really don’t know enough about Avino to initiate a position just yet… I’ve got to do a lot more research…

Anyway, I’ve got way too many companies on my radar than spare capital available… I can’t buy up everything I have my eyes on, but if I had to choose right now, again, I’d go with: Orca Gold, GoldQuest Mining, and Teranga Gold.

 

What about you?

 

Happy Hunting!

{ 12 comments… read them below or add one }

1 Roadmap2Retire December 17, 2016 at 4:41 am

Thanks for sharing, Jay. Looks like some good moves there….I havent sold my stocks yet, but just before this PM bloodbath managed to sell some covered calls, which Im sure will not get called away come execution date. The companies I hold are solid and will come out on the other side of this just fine. Now I have to decide if I want to add more or look for something else in the space. Your picks on Orca and Aton look very intriguing…hopefully I will get around to researching them this weekend.

cheers
R2R

Reply

2 FI Fighter December 17, 2016 at 3:03 pm

Sabeel,

This bloodbath in PM stocks is opening up some wonderful buying opportunities yet again. In the short-term, it might be extremely painful, but over the med/long-term, I’m convinced these firesale bargains will provide some spectacular returns.

Covered calls is another great strategy to earn income and juice the returns on some of these stocks… Works well with the more liquid holdings, but I would imagine it’s tougher to execute with some other smaller microcap juniors…

Orca and Aton are my 1-2 punch to play the emerging Arabian-Nubian shield, and I believe both companies have immense upside given their large land packages and underexplored terrain. I’m convinced there’s got to be a lot more gold buried there! 🙂

All the best!

Reply

3 Burnside December 17, 2016 at 8:12 am

Jay,
In light of your interest in Goldquest, you should take a look at Unigold. It, too, is in the Dominican Republic and is chasing very similar mineralization. Essentially, it’s Goldquest a few years ago, and they recently had some pretty good drill results. Thanks for your insights! I’m an avid reader of this site and your posts on CEO.CA. Like last December, your posts help steel the nerves to run against the tide.

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4 FI Fighter December 17, 2016 at 3:10 pm

Burnside,

Thanks for the tip on Unigold! The above is a short list of what I’m watching, but I’ve actually got some much more extensive watchlists as well, and Unigold and Participate Gold are among others the I’m monitoring very closely. With Unigold, on a EV/gold ounces ratio, the company is a bargain… I think they are at 2 million ounces or so and targeting 3 million ounces… with hopes of hitting some massive sulphides, which would be a complete game changer.

At sub $10 million market cap, Unigold is certainly appealing… My only concern would be in figuring out how economical their ounces in the ground are since there is no PEA yet available… And we are talking about refractory ore in the Dominican Republic… The company started off focusing on open pit, but due to extensive overburden involved, have shifted strategies to possibly going with an underground operation, or maybe a combination of the two if they can drill out higher grade ore… I guess it’s that bit of uncertainty that makes me hesitant to pull the trigger at this time, and it’s easier to go with GoldQuest since they are farther along the path of development, with a PFS recently released… and GoldQuest stock is down -50% in the last few months!

But in general, I really like the Dominican Republic for prospectively and GoldQuest’s Romero discovery was a blind target, so it gives inspiration to all the companies in the region to find more of those… Rob McEwen being a major shareholder of Unigold is a strong plus as well… As a takeover target, I think most investors are hopeful he will eventually acquire Unigold, GoldQuest, or both…

All the best!

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5 Alexander Gregory December 17, 2016 at 3:41 pm

AG looks great again as well with that drop after the rate hike put it in my buy price again

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6 FI Fighter December 17, 2016 at 4:04 pm

Alexander,

AG looks like a great buy right now, indeed! I put Avino on the list above, but if push came to shove, I could very well just go with the company I’m more familiar with (and already own), and one that I have extremely high confidence will do exceptionally well in a rising bull.

Cheers!

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7 Srini December 20, 2016 at 2:31 am

Hi Jay,
I am very curious to know your thoughts on selling AG on one side and planning to buy Avino other than what you have commented.

My disclosure : I rotated out of Avino @ 1.00US to ASU @ 0.3US in 2015. hence i am even more curious 🙂

Cheers
Srini

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8 FI Fighter December 23, 2016 at 6:16 am

Srini,

I sold Ag a bit higher than where it is today… At current prices, both AG and ASM look cheap! At this point, I think investors would do well with either, really…

If I had to choose right now, I might lean towards AG just b/c I’m more familiar with it and have a feeling it will be a leader during the next leg up for silver.

Cheers!

Reply

9 kiwisparky December 17, 2016 at 10:36 pm

Whats your thoughts on Volt and its PFS this week as well as the share price tank after its release?

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10 FI Fighter December 23, 2016 at 6:18 am

kiwisparky,

It looks like the market expected much more from Volt and the PFS… Not necessarily in terms of NPV and economics, but more wording and affirmation that Volt would be targeting the anode battery market… Looks like they will need to rely heavily on acid purification, which is already a saturated market…

Volt does have some MOUs, so we’ll see if they can convert those over to BOAs. If so, I think the company should be fine in the long run… I’m hedging my bets with about an equal sized position in Black Rock Mining, which looks like they will be able to produce a higher purity end product with less chemical treatment.

Take care!

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11 Josh December 20, 2016 at 9:07 am

I know you’re not a tax lawyer, but was wondering if you could chime in on a tax harvest idea I just randomly thought up (could be missing something obvious, I rarely do anything beyond long term buy & hold with a few losses sold in late Dec along the way for loss harvesting if I have lost faith in the underlying company’s ability to quickly rebound).
As someone who has a bit of new (positions taken in the summer) losing exposure to a couple gold miners, how foolish would it be to sell those stocks to offset gains in the rest of my portfolio and then to grab exposure in some other similar mining stocks or even in physical gold? Would avoid a wash requirements as I’m not repurchasing the original mining stocks though I could look back into the original stocks in a month.
So I would be keeping my similar exposure, just shifting to other miners while they are also devalued while claiming the tax benefit.
With this class so volatile I wouldn’t want to just check out for 30 days before buying back in. This is also making the assumption that a rising tide lifts all boats and I wouldn’t be selling the better of the companies from the bucket and buying the inferior ones with less upside.

Reply

12 FI Fighter December 23, 2016 at 6:19 am

Josh,

Yes, tax harvesting is a very popular strategy and one that many are using right now. In fact, today is the last day to take advantage of that, as I’m writing this…

I may make some moves today to take advantage of this tax benefit.

Cheers!

Reply

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