Portfolio Update: Adding to My Best Ideas (February 23, 2017)

by FI Fighter on February 24, 2017

in Precious Metals Updates

Rise of the silver surfer! I was afraid that might happen sooner or later, so as I was sharing with readers last time around, I’ve been making it my focus to try and pick up some more cheap silver stocks while the spot price of silver still languished below $18/oz.

Earlier this morning, we all witnessed quite a pop in the precious metals!

Luckily for any buyers out there, the mining stocks did NOT follow suit… and their response was quite muted despite the big percentage increase in the underlying physical metals…

So, there are still plenty of opportunities still out there! For myself, I decided to top off on a few of my Core Holdings a few days ago, before this most recent run up…

Here is a summary of my recent transactions over this past week.

  • Bought 500 shares of First Majestic Silver (AG) @ $9.37/share
  • Bought 1,000 shares of Fortuna Silver (FSM) @ $6.12/share
  • Bought 15,000 shares of Orezone Gold (ORZCF) @ $0.5009/share (~C$0.6558/share)
  • Bought 20,000 shares of Orezone Gold (ORZCF) @ $0.4998/share (~C$0.6544/share)
  • Bought 37,000 shares of Hummingbird Resources (HUMRF) @ $0.321/share (~£$0.2576/share)
  • Bought 7,500 shares of Hummingbird Resources (HUMRF) @ $0.333/share (~£$0.2673/share)

 

First Majestic Silver and Fortuna Silver

First Majestic Silver (AG) and Fortuna Silver (FSM) are silver ideas that I’ve discussed before on this blog in the past. Nothing too exciting going on here, I just wanted to increase my stake since my gut feeling (which could be totally wrong) is telling me that the spot price of silver will eclipse $20/oz sometime later this year… I added shares of both on the dip a few days ago…

I now own 2,500 shares of AG.

I now own 6,000 shares of FSM.

Orezone Gold

Orezone Gold (ORE.V/ORZCF) has been getting hit pretty good (for whatever reason)… I haven’t read any negative new press releases, so for now, I’m just adding to my position. Getting in around C$0.65/share and below is a very good deal, as far as I’m concerned.

I now own 100,000 shares of ORZCF.

Hummingbird Resources

Hummingbird Resources (HUM.L/HUMRF) is a stock that I have never talked about before on this blog. Similar to Orezone Gold and Avnel Gold (AVK.V/AVNZF), Hummingbird Resources is another advanced stage gold developer that has an exciting project in West Africa.

On the surface, the economics of the Yanfolila gold project (located in Mali) look quite robust to me.

From Hummingbird Resources.

From the above chart, you might be thinking that Yanfolila looks like a rather “smallish” mine with only 709,800 gold ounces defined in the Probable Reserves category.

From Hummingbird Resources.

However, the total inventory (non-JORG compliant figures) of 2,202,700 gold ounces illustrates the exploration potential that exists at Yanfolila that could potentially add many more ounces and extend the life of mine beyond the DFS quoted figure of 8 years.

From Hummingbird Resources.

Gonka (Phase 3), for example, is a deposit that might possibly add an extra ~170,000 gold ounces (over 6 years) but is NOT currently accounted for in the DFS mine plan/reserves category.

From Hummingbird Resources.

Yanfolila (Phase 1) is slated to come online later this year, by the end of 2017.

To learn more about Hummingbird Resources, please see this short video below.

Hummingbird Resources trades natively on the London AIM, so it’s a bit of an unfollowed and “under the radar” type of gold stock, relative to its Canadian (TSX, TSX-V) and Australian (ASX) peers.

Nevertheless, HUM.L has already started re-rating this year, as shares are now up over 50% year to date (YTD).

A capital raise (equity financing) of $67 million USD was done last summer and a $55 million USD Debt Facility completed late last year, so it looks like “all systems are go” to put Yanfolila into commercial production.

There are no guarantees when it comes to mining, but Hummingbird is now entering the construction phase as it slowly transitions from developer to producer.

I like the odds of success here, and CEO Dan Betts seems like a very enthusiastic and likable guy (as far as I can tell), so I’m going to speculate here that the company will be successful and shares of HUM.L will re-rate significantly higher by this time next year (assuming the underlying gold bug narrative doesn’t collapse again).

We shall see…

The “ace up the sleeve” for the company is its other gold asset, Dugbe (located in Liberia), which is MASSIVE (PEA shows a 20 year mine life, producing 125,000 gold ounces/year) and also pretty advanced stage (DFS is currently being optimized). If/when Hummingbird is able to get its core asset, Yanfolila, successfully into commercial production and generating ample free cash flow, the company will no doubt start to shift its focus towards putting this second gold mine into production ASAP.

From Hummingbird Resources.

The project economics on Dugbe aren’t quite as robust as Yanfolila (it’s more CAPEX intensive), and certainly there’s still a HUGE question mark on how workable a jurisdiction Liberia is (we’re talking essentially new frontiers here for commercial gold production), which explains why this once flagship asset has been relegated to second-tier.

Nevertheless, if you’re a speculator who believes in the long-term trend of higher gold prices, you’ll no doubt find immense appeal with the upside potential that an “optionality play” (which already works at today’s low gold price environment!) like Dugbe could unlock for shareholders someday down the road.

We’re talking 4,226,000 gold ounces of NI-43-101 compliant resources (indicated + inferred).

From Hummingbird Resources.

Between Yanfolila and Dugbe, investors are looking at 6.4 million HIGH QUALITY and ECONOMICAL gold ounces in total resource currently trading at £$90.21 million (~$120 million USD) market cap.

To better clarify — Hummingbird ain’t no “junk collector” of marginal, you could even say crappy (and altogether worthless/useless) gold ounces…

Yanfolila is currently being built and Dugbe will be built (this project doesn’t need something asinine like $2,000/oz gold to work; The PEA features an attractive IRR of 29% at $1,300/oz gold!).

Sounds like an excellent deal to me!

I now own 44,500 shares of HUMRF.

And I’m on the bid for a lot more… I would like to top off at 100,000 shares, ideally.

Summary

Nothing too crazy with this update (I think)… I added more silver shares via First Majestic Silver and Fortuna Silver. Next, I saw that shares of Orezone Gold still looked cheap, so I bought a few more. Lastly, I researched more into another West African gold developer that is on the cusp of reaching commercial production, I liked what I saw, so I initiated a new position with Hummingbird Resources.

But yes, quite a number of moves over the last month or so…

Here’s the current mining portfolio.

Recent as of February 24, 2017.

Hopefully, I’m well situated now and ready for the next leg up of this “bull market” in precious metals!

 

C’mon gold and silver… It’s time for you to shine!

 

And catch up to your cousin cobalt… even just a little bit would be pretty sweet! 🙂

 

Happy Hunting!

{ 2 comments… read them below or add one }

1 MiningBookGuyNo Gravatar February 25, 2017 at 12:51 pm

Wow, some serious money piling into these! I should look into these silver plays. For gold, newsflow on Hummingbird (HUM.L/HUMRF) and Avnel (AVK.V/AVNZF) is definitely catching my attention in Mali. I’ve got my own reasons to get people interested in Mali plays right now.

I just made a HUGE (messy) post at CEO.CA on all the Mali gold plays I’m following (including a couple positive notes on both Hummingbird & Avnel). In case anyone is interested in new ideas, check it out here: https://ceo.ca/mali?bf78563cae52

Anyway, best of luck with the new picks! =)

MBG

Reply

2 ChatyakNo Gravatar February 27, 2017 at 8:50 am

Wow – I am but a tiny minnow in this pond compared to you lol

Reply

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