Portfolio Update: Subtracting to My Lithium Position (September 21, 2016)

nemaska-lithium

So, nobody likes to admit to “trying to time the market”, but I will confess to attempting to do just that yesterday morning. As I mentioned in the last article, I had a strong hunch that the Fed would not raise interest rates. Because of that suspicion, I was rather keen on adding some more gold and silver mining shares.

Unfortunately for me, I’m operating on Kyoto (Japan) time now, and the North American markets don’t open until 10:30 PM out here…

kyoto-1

Sigh…

Yesterday, I tried to place a limit order to close out my position in Nemaska Lithium (NMKEF), but fell asleep before the order went through… I didn’t cancel the sell order either, so this morning I woke up to find out that I had liquidated all 12,000 shares of NMKEF @ $1.03/share.

Shares of Nemaska were up after FOMC, along with basically every other stock out there…

screen-shot-2016-09-22-at-7-36-01-pm

screen-shot-2016-09-22-at-7-37-42-pm

When all was said and done, I ended up profiting about $980 on this short-term trade.

Nothing earth shattering going on here…

What I really wanted to do was sell out of NMKEF before Janet Yellen spoke so that I could load up on shares of Orezone Gold (ORE.V/ORZCF)… But my NMKEF sell order wouldn’t trigger, and I was too stubborn (dumb) to lower my price target by one measly penny (yeah, and I’m one to give a good buddy of mine a real hard time about squabbling over minuscule little pennies, hah!)… Ultimately, I just got really tired of waiting, and decided to call it a night…

Yes, I expected the mining stocks to get a boost in the event a rate hike didn’t materialize, but never did I expect the gold/silver miners would shoot up so much! Orezone, in particular, finished the session up 16.13%!

screen-shot-2016-09-22-at-6-51-29-pm

Boom!!!

So, there you go… Feel free to call me a freekin’ idiot!

Why did I want to close out my position in Nemaska at this time? Well, as I mentioned earlier this month, when it comes to stock positions, I’ve been wanting to consolidate my portfolio a bit, as I don’t really have that much interest in following too many stories… Right now, I’m currently at 20 positions, and I still think I own too many stocks…

screen-shot-2016-09-22-at-7-59-08-pm

Nemaska Lithium is still a great lithium story, but I just feel like I am well covered in the space with my other two favorite ideas, Critical Elements (CRE.V/CRECF) and Birimian Limited (BGS.AX/EEYMF).

Nothing against Nemaska Lithium, it’s just that I got in too late to the party… At a current market cap of about C$444 million, quite frankly, I just don’t think there’s that much upside potential for anyone getting into the story today… Granted, Nemaska is a much more advanced-stage development play, so the risks are arguably a bit lower (at this point in time) relative to some of my other lithium ideas…

But I’m not going to bullshit any readers here…

When it comes to mining stock speculations, I’m trying much harder these days to focus on risk vs. reward. Bottom line, I want to own some shares of companies that I feel have multi-bag potential… And with the recent whacking of Orezone (the stock is off about -50% due to a resource reduction of -30%), I just see more juice with that name…

Learn more about the recent Orezone resource reduction fiasco here.

Learn more about Orezone here.

Please do your own research and due diligence, ALWAYS!

And as I’m learning as the bull market in precious metals continues its ascent, you usually make your most gains by focusing on companies with a sub $100 million market cap… The large caps (senior producers, mid-tiers, streaming and royalty companies, etc.) are simply too stodgy to move much… It’s the Law of Inertia, or something along those lines…

Anyway…

Shares of ORE.V were trading around C$90 million market cap before yesterday’s pop, and that doesn’t even take into account the ~$25 million or so that they have in cash (and no debt), so the enterprise value is even more attractive…

And if gold pushes through $1,400/oz, I have a feeling those sulfide ounces at depth will start to become a lot more valuable than their currently ascribed market value of ~$0

So yeah, I like the upside with ORE.V… Definitely, there are headwinds and the resource downgrade still needs to be resolved; there are no guarantees everything will work out…

But again, it’s matter of risk vs. reward… Seldom are you ever going to get tremendous upside potential without taking on some extra risks…

Anyway, it also doesn’t hurt that Orezone management has shown its faith in the company, recently, as evident by the torrid amount of insider buying.

From Canadian Insider.

screen-shot-2016-09-22-at-7-01-44-pm

That’s a lot of confidence that things will work out, right?

 

Anyway, I screwed up this opportunity, so we’ll see if I get another crack at adding shares of Orezone at a favorable price (sub C$100 million market cap).

 

If not, oh well, life goes on and there’s ALWAYS another train arriving at the station!

 

In recent months, I have liquidated out of the following lithium stocks:

  • Nemaska Lithium (NMKEF); ~$980 realized gains
  • Orocobre Limited (OROCF); ~$1,314 realized gains
  • Lithium Americas (LACDF); ~$518 realized gains
  • Galaxy Resources (GALXF); ~$50 realized gains

Seriously, all this buying/selling was never a part of the “plan”… I’m sorry, I make lots of mistakes, and I keep trying to learn as I go…

Sudden starts and stops are sort of what I’m known for, anyway… Please don’t be surprised if this keeps on happening again and again!

For now, my main focus with lithium is on these two stocks:

  • Birimian Limited (BGS.AX/EEYMF)
  • Critical Elements (CRE.V/CRECF)

I still own shares of Altura Mining (AJM.AX), but I’m going to try and liquidate out of that holding when I can (I need the stock to recover a bit, it’s too cheap to sell out now)… It’s just a small position (and I’m down an awful lot!), but if Birimian can keep proving up a large-scale, high-grade spodumene deposit, I’ll feel even less inclined to hold onto shares of AJM.AX.

No, I don’t mind if my shares are down…

My positions in CRE.V/CRECF are also down a lot right now, but I still really like that lithium idea…

Oh yes, I also own shares of Pilbara Minerals (PLS.AX), which I also still like a lot (the company just released positive DFS and PFS reports for 2Mtpa and 4Mtpa operations, respectively), but similar to Nemaska, I got into the story a bit too late… Currently, I don’t mind holding onto my shares of PLS.AX, but this one is probably going to be trapped capital for awhile (they are entering the “Orphan Period” of the mining life cycle)…

From Exploration Insights.

6a00d8341cba0553ef014e60fc8376970c

And my late entry caps much of the upside potential… I don’t expect multi-bags with this one, but I remain optimistic.

The one lithium stock I missed out on big time? Kidman Resources (KDR.AX)… But that name has blown up too much for me to go running after it now… I’m trying my best to stay disciplined and not chase up… I usually get burned when I do… Lesson learned, I hope!

 

With mining (whether it be gold, silver, lithium, copper, etc.), I prefer high-grade deposits, and when they’re selling for even less than low-grade, it’s a no-brainer for me…

 

Anyway, that’s my update for now…

 

Thanks for following along!

Print Friendly, PDF & Email
Sharing is Caring:

5
Leave a Reply

avatar
4 Comment authors
YonFI FighterJCSK Recent comment authors
  Subscribe  
newest oldest most voted
Notify of
SK
Guest
SK

Jay, I have been following your writings since the beginning of 2016 and I am looking to invest into Lithium miners [for a time horizon of divesting by 2020]. I am particularly interested in Critical Elements and was curious if you will be writing anytime soon about your thoughts.

Let me know.

I learnt a bootload about investing and mining from you. Thank you so much for your time and effort.

–SK

JC
Guest
JC

Adding onto SK’s comment: From what I’ve read in your previous posts, you look for sub 100 market cap and high grade deposits. What else fits your criteria before clicking the buy button? I’m new to precious metals investing and still learning how to spot a good buy.

Yon
Guest
Yon

Hi do you still like bgs? Any comment on the slump?

Thanks

Close Menu