Portfolio Update: Reshuffling the Deck (February 27, 2017)

by FI Fighter on February 28, 2017

in Precious Metals Updates

I made a few more transactions yesterday… As my luck would have it, my purchases were made prior to the MASSIVE SMACKDOWN that many mining stocks experienced towards the latter half of the day…

Such is life.

Nevertheless, I got to position my portfolio into some more names that I like, and in the process I started offloading some shares of another company that I’m not quite enamored with, booking some gains along the way.

Here’s the latest.

  • Bought 12,500 shares of Cordoba Minerals (CDBMF) @ $1.03/share (~C$1.36/share)
  • Bought 55,500 shares of Hummingbird Resources (HUMRF) @ $0.333/share (~£$26.82/share)
  • Sold 10,600 shares of Defiance Silver (DEF.V) @ ~C$0.381/share

 

Cordoba Minerals

Cordoba Minerals (CDB.V/CDBMF) is an early stage explorer (prospector generator) that I’ve been tracking for some time now… To be quite frank, I’m pretty late to the party with this one, but after doing some more research into this company, I liked the upside potential enough to initiate a position.

I picked up some some shares of CDMBF on the (small) dip, thinking that anything below C$1.40/share over the long-term would be a pretty decent entry point.

Well, as it turns out, I was way too early with my timing (per usual), as shares of CDB.V finished off the day down -13.67%!

Luckily for me (I guess), I only initiated a partial position this time around, so it now looks like I’ll have a wonderful opportunity to add some more shares at an even greater discount.

What can I say? Mining stocks are super volatile, so if you’re going to play in this space, you better learn to just roll with it

Why do I like Cordoba Minerals?

In short — District scale potential.

The company is searching for the next major copper/gold porphyry discovery.

From Cordoba Minerals.

Yes, I know what you’re thinking… Every junior exploration company out there claims to be looking for the next MASSIVE discovery that is district scale in size…

In the case of Cordoba Minerals, I wouldn’t normally take such bold talk as verbatim, but so far it looks like all the right pieces are lining up for the company.

For starters, Cordoba has the best partner you could possibly ask for in High Power Xploration (HPX), which is a privately owned company spearheaded by Robert Friedland (arguably the greatest mine finder in mining history)… Yes, that very same Robert Friedland who rewarded me with my best investment ever

So, yes, anytime you have Robert Friedland involved in a new mining venture, you can be certain that I’ll at least pay attention (and entertain) the idea of investing into some shares.

Here is the joint venture agreement Cordoba has in place with HPX.

From Cordoba Minerals.

HPX has already earned 51% interest in the project, and the joint venture between the two companies has now entered into Phase 3. In order to complete the full 65% interest earn in, HPX will need to take things through all the way to a Feasibility Study… and if they can make it to that point, I think it will be pretty safe to say that Cordoba shareholders will have a winner on their hands.

With joint ventures, yes, no doubt it can be seen as a negative for a junior mining company because they lose a large stake in the underlying project (typically taking on a much smaller minority interest, like Cordoba has done), but there are benefits that are worth pointing out as well. For starters, a joint venture minimizes dilution from a capital structure point of view. In the case of Cordoba Minerals, the burn rate will be very low because HPX will be funding all the drilling and exploration work. So, no need to keep going back to the equity markets to raise more and more and more capital.

Take a look for yourself… Cordoba Minerals has less than 100 million shares outstanding.

From Cordoba Minerals.

Certainly, this is not a perfect company by any means, and there are 13.6 million warrants out there, which is a tad much given how large a percentage they makes up of the overall share structure.

But you’ve got to love the Large and Institutional Shareholders backing up this story: HPX, BlackRock, Continental Gold, Sprott, etc.

Not to mention this is currently an Exploration Insights (Brent Cook and Joe Mazumdar) top pick.

This is mining and early stage exploration we’re talking about here, so there are no guarantees of course! But for sure, Cordoba Minerals has got the industry’s best names believing in the upside potential.

CEO Mario Stifano has got some swagger too, as evident by the comments he made during the Metals Investor Forum (MIF) back in late November of 2016.

OK, anytime you’re going to attempt to compare your mineral asset to Vancouver and San Diego real estate, you’re going to have my full attention!

As readers of this blog know very well, I am 1,000% convinced that the best path towards early FI and wealth is to accumulate the best of the best, tier 1 assets. Unfortunately, Class A rental properties in prime locations just aren’t very affordable right now, which is why I have shifted my focus 100% to mining stocks.

And for those who are interested in learning more about the geology stuff, check out this following video (it’s interesting but way over my retail head).

Some “geo porn” for you… See if it piques your interest.

From Cordoba Minerals.

The last set of drill results also caused the stock to go vertical…

From Cordoba Minerals.

Cordoba Minerals Intersects 4,440 g/t Gold, 10.25% Copper, 24.7% Zinc and 347 g/t Silver over 0.9 Meters in New Discovery

Alacran drilling highlights:

  • ACD036:

    • 0.90 meters (m) @ 4,440 g/t gold (Au) + 10.25% copper (Cu) + 24.70% zinc (Zn) + 347 g/t silver (Ag)
  • Part of

    • 5.00 m @ 800.90 g/t Au + 3.70% Cu + 8.60% Zn + 88.63 g/t Ag

    • 136.00 m @ 1.00% Cu + 0.56 g/t Au (cut*)

And the accompanying photo.

From Cordoba Minerals.

So, definitely some exciting stuff going on here for this Colombian explorer!

Oh, and hey, what’s this? The Alacran deposit has an initial resource to its name!

From Cordoba Minerals.

Not exceptionally high grade copper we’re looking at here (at least compared to the deposits found in the Democratic Republic of the Congo, such as Ivanhoe Mines’ Kamoa and Kakula deposits), but at a cutoff grade of 0.3% CuEq (copper equivalent), we’ve got an AuEq (gold equivalent) of 2.426 million ounces…

So, not a bad start by any means… There is definitely “smoke” in this region…

Now everyone is working feverishly to find the “fire”…

Please note: Cordoba Minerals is another one of those extremely high risk “lottery ticket” speculations of mine… The upside could be huge, but please keep in mind that the odds of failure are also quite high. Currently  there’s a ton of hype behind this company so shares aren’t cheap and my guess is that a lot of future growth is already priced in. As ALWAYS, please do your own due diligence and research before putting any of your own investment capital at risk!

In summary, we’ve got the following with Cordoba Minerals:

  • District scale potential.
  • The right (best) possible joint venture partner in HPX and Robert Friedland.
  • Tight share structure.
  • Strong shareholder backing (HPX, BlackRock, Continental Gold, Sprott, Exploration Insights, etc.).

 

I’d be interested in buying more shares on any significant dips… Cordoba Minerals isn’t my favorite idea out there by any means (mostly because shares don’t appear to be undervalued at this time due to all the hype surrounding it), but the upside potential has me intrigued enough to build a decent sized position.

Just to be clear — I’m chasing up more than I’m chasing down here… Not my preferred strategy, as you all know… Cordoba Minerals is NOT a deep value play right now, but man those high grade hits have certainly got me hooked to this developing story.

I now own 12,500 shares of CDBMF.

Hummingbird Resources

I talked a lot about Hummingbird Resources (HUM.L/HUMRF) last time around, and true to my word, I ended up picking up many more shares to top off my position.

In terms of re-rating potential, the company should be entering commercial gold production by the end of this year, so I would expect the market to recognize this achievement and reward the stock accordingly. You never know for certain, but Yanfolila is a very robust project that even works down at a $1,000/oz gold price environment and can still generate free cash flow.

There seriously aren’t that many ~1 million ounce gold deposits out there that are capable of producing 60% IRR (at $1,250/oz gold price), low CAPEX (~$80 million USD), and can sport an All-in Sustaining Cost (AISC) of less than $700/oz.

Now, the last major remaining obstacle that Hummingbird needs to overcome in order to succeed is to put Yanfolila into production on time and on budget… Much easier said than done, but I like their odds.

I gotta say, the company’s most recent hire of a very experienced mine builder with over 30 years of experience inspires confidence.

From Hummingbird Resources.

Dan Betts, CEO of Hummingbird Resources, said: “The appointment of a GM to join the team is a crucial appointment for Hummingbird. It is no exaggeration to say that we have searched extensively for the candidate who we believe demonstrates the right blend of skills, commitment and chemistry to join our team. Also to look beyond the immediate focus of constructing and commissioning of Yanfolila towards our further ambitions of operating of a world class project, and building a world class gold mining company. As a Board, we believe that to have attracted somebody of Kevin’s experience speaks volumes about the quality of the Yanfolila Gold Project and the character of the existing Hummingbird team. We welcome Kevin on board.”

 

Looks to be the right move at the right time at this most critical juncture of Yanfolila’s development…

 

I now own 100,000 shares of HUMRF.

Defiance Silver

Lastly, I started the task of liquidating out of my position in Defiance Silver (DEF.V/DNCVF). When it comes down to it, I really haven’t come across a junior silver company that I like very much… Basically, every single one that I’ve looked at, I’ve been able to find red flags that give me a cause for concern. As I mentioned a few posts ago, even though I’m investing/speculating in an extremely risky and volatile sector right now in mining, I’m still doing my best to hedge my bets and reduce my risk exposure.

In the silver space, I feel a lot more comfortable sticking to the producers and advanced stage developers, so I’m going to do the easy thing and stay within the bounds of my comfort zone.

In particular:

  • First Majestic Silver (AG)
  • Endeavour Silver (EXK)
  • Fortuna Silver (FSM)
  • Alexco Resource (AXU)
  • Bear Creek Mining (BCM.V)

That’s 5 silver stocks and that’s plenty good enough for my needs… Besides, silver stocks are already so exceptionally volatile that any sharp rise in the spot price of silver will send every last one of these companies to the moon… Yes, even the largest cap producers will go bonkers (which I’m not certain the same can be said for gold stocks)! In other words, the Big 5 that I’ve outlined above should give me all the leverage that I need to play the rise of the silver surfer. So, when it comes to silver stocks, I’m going to err on the side of caution and stick to the more proven companies.

The main problem I’ve had with Defiance Silver over the last year or so is that the company has been deafeningly silent when it comes to news flow… Like, you really have no clue what management is doing behind the scenes… I don’t know if they’re drilling, or even planning on drilling anything anytime soon… I realize that Defiance has had their drill work delayed a bit due to waiting around for permits to be granted, but still, a small update every now and then to shareholders would have been much appreciated (certainly by me).

With so many other attractive junior explorers out there, I really don’t see any appeal with continuing to hold this stock any longer… My entry point was favorable, and I’ve basically doubled my money on this speculation, so now it’s time to say goodbye.

I still own 42,000 shares of DEF.V, but have plans to liquidate out of my position entirely.

Hopefully soon…

Summary

A few more transactions with this update… I got into a new spec stock in Cordoba Minerals, I topped off my position in Hummingbird Resources, and I started to unload shares of Defiance Silver.

After all my moves were completed, BAM, my mining stocks took a major tumble down the hill…

That’s just the way the game goes sometimes… Deal with it or don’t bother playing at all…

Here’s my current portfolio.

I’m still sitting on some decent amount of cash, so if this downward spiral continues for awhile longer, I will have to “back up the truck” yet again…

 

Volatility… It can be your best friend or worst nightmare!

 

Happy Hunting!

{ 9 comments… read them below or add one }

1 FloNo Gravatar March 1, 2017 at 5:49 am

Hey man, nice report
In terms of silver juniors what do you think of santacruz? Havent spotted any redflags there

Reply

2 FI FighterNo Gravatar March 1, 2017 at 8:47 am

Flo,

Honestly I don’t know much about Santa Cruz at all. I could be totally off base here but if memory serves, I believe their deposit is more on the small side of the scale. Please correct me if I’m mistaken.

Cheers!

Reply

3 SriniNo Gravatar March 1, 2017 at 8:19 am

Jay,
I have been dipping into AG/ more AXU over the past 3 days. Same thing happened to me as well when i completed my buy (may be limitation due to time zone ), i was shaking my head when i woke up to see the crash in the later half.

Today, I placed orders low enough ( i thought) today before market opening and tada got filled in first minutes of opening. As long we continue to dip in during weakness mkt, should make us look smart 3-6 months down the line.

I would love to buy more BearCreak if it cracks down. Though i wanted to increase my exposure, i end up buying AXU more as it has corrected more than BC.

cheers
Srini

Reply

4 FI FighterNo Gravatar March 1, 2017 at 8:45 am

Srini,

Wow what a coincidence! I added some AXU this morning as well… unfortunately for me it will have to be a swing trade as I’ll probably only hold out for a few bucks (got to buy me a new laptop)…

I added more CDB.V as well and topped off there.

I’m writing this on my phone so posting will be light until I get back to HK and try to revive my broken laptop… or buy a new one back in the states.

Cheers!

Reply

5 SriniNo Gravatar March 2, 2017 at 9:35 am

Ha ha AXU buying you a laptop is cool. My plans for AXU is big. Its going to fund part of my retirement life if we see a full version of a bull market 🙂 Yea make sense to buy laptop in US. Enjoy the adventure and travel safe back home.

This correction is getting crazy. My AXU stink bid at 1.52 & AG bid at 8.51 got filled today. Man if this continues i will be running out of dry powder in couple of days. May be only then i will stop looking on daily basis and enjoy my retirement life with my wife & kids.

Cheers

Reply

6 JanNo Gravatar March 1, 2017 at 7:59 pm

Jay, what do you make of this article?? Excerpt below.

Gold Miners Running to Stand Still After Cuts, Franco CEO Says
by Danielle Bochove March? ?1?, ?2017? ?5?:?38? ?PM Updated on ?March? ?1?, ?2017? ?8?:?00? ?PM
Industry is ‘ex-growth,’ says Franco-Nevada’s David Harquail
Royalty and streaming company may boost non-gold assets to 20%

The world’s gold miners will be running on the spot for years to come as a surge in gold prices prompts them to secure new production from less profitable projects, according to the largest mine streaming and royalty company.

“In my mind, the industry is ex-growth,” said David Harquail, chief executive officer of Franco-Nevada Corp.

After a downturn that squeezed capital investments, most gold producers have no choice but to invest in new projects as existing mines are depleted, Harquail said Wednesday in an interview. They’ll be faced with options that are, cumulatively, unlikely to boost global gold production or lower the sector’s overall costs.
“None of those projects are really great,” Harquail said at the BMO Capital Markets mining conference in Florida. “They would have been built by now if they were.”
As a result, Harquail said Franco-Nevada plans to do more deals in the non-precious metals space, with a particular focus on oil and gas. The company’s mandate allows it to have as much as a fifth of its portfolio outside precious metals, and he would like to deploy capital to get to that level soon. Currently 94 percent of Franco-Nevada’s holdings are in precious metals, he said.

Reply

7 FI FighterNo Gravatar March 1, 2017 at 8:14 pm

Jan,

FNV is the best gold company out there and these guys are all about landing the best deals possible. They certainty know how to implement “buy low and sell high.”

Well, they are into buy and hold forever so they don’t sell necessarily, but they are discliplined enough to know when to stop chasing after deals… FNV can’t really compete for deals now because the equity markets have opened back up and bought deals are being oversubscribed on the weekly…. the sentiment across mining is not anywhere near as bearish and negative as it was in 2015…

FNV will focus more on oil and gas and other commodities to land good deals… I’ve tried to adopt the same approach by staying clear of expensive real estate…

There is a time to sow and a time to reap… FNV worked overtime during the bear so now they can take the foot off the pedal and relax a little bit…

Timing the markets??? Why not, the best in the business do so all the time…

Reply

8 JanNo Gravatar March 2, 2017 at 3:35 am

Thanks for that Jay.
I thought the comment “The world’s gold miners will be running on the spot for years”, meant that gold miners = no stock growth.

Reply

9 MikeNo Gravatar March 2, 2017 at 2:28 pm

Huge down week in the miners…I feel a shopping spree coming soon…

Reply

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