Erik Wetterling - The Hedgeless Horseman – Fri 17 Jan, 2020

Lessons for investing in junior stocks – Never bet everything on a singe drill campaign

Erik Wetterling kicks off today by sharing a lesson he has learned while investing in junior metals companies. This lesson is to never go all in on a company that has only enough money for one drill campaign. He relates the recent news out of GFG Resources where the Company missed with its latest round of drill results. The stock is getting hit hard but still has another property that is being drilled. Erik outlines how he is trading it.

Click here to visit Erik’s site – The Hedgeless Horseman.

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Comments:
  1. On January 17, 2020 at 8:52 am,
    cfs says:

    2020-01-17 11:13 ET – News Release

    VANCOUVER, BC / ACCESSWIRE / January 17, 2020 / AZARGA URANIUM CORP. (TSX:AZZ)(OTCQB:AZZUF)(FRA:P8AA) (“Azarga Uranium” or the “Company”) has filed its National Instrument 43-101 (“NI 43-101”) Technical Report and Preliminary Economic Assessment (“PEA”) for its flagship Dewey Burdock In-situ Recovery (“ISR”) Uranium Project in South Dakota, USA (the “Dewey Burdock Project”) following the Company’s press release dated 4 December 2019.

    Highlights:

    Pre-income tax IRR of 55% and NPV of US$171.3 million (at US$55 per pound uranium sales price and 8% discount rate)
    Post-income tax IRR of 50% and NPV of US$147.5 million (at US$55 per pound uranium sales price and 8% discount rate)
    14.3 million pounds of U3O8 production over 16 years; steady state production of approximately 1 million pounds per year achieved in year 3
    Low initial capital expenditures estimated at US$31.7 million
    Direct cash operating costs estimated at US$10.46 per pound of production
    Summary of Economics.

  2. On January 17, 2020 at 8:57 am,
    cfs says:

    2020-01-17 09:13 ET – News Release

    Mr. Donald Penner reports

    SITKA GOLD INTERSECTS 11.70 METRES OF 3.23 G/T GOLD AND 72.86 G/T SILVER IN INITIAL DRILLING AT BURRO CREEK GOLD/SILVER PROPERTY,

    • On January 17, 2020 at 2:54 pm,
      OOTB Jerry says:

      Instead of just post these articles,……why don’t you make some statements
      Of course we know Obama was a PLANT……….should NEVER HAVE BEEN PRESIDENT…PERIOD.

      • On January 17, 2020 at 2:55 pm,
        OOTB Jerry says:

        BTW……..thanks for posting……..

  3. On January 17, 2020 at 9:27 am,
    cfs says:

    https://www.asiatimes.com/2020/01/article/big-brother-australia-aims-to-ban-cash-spending/

    Coral all money in banks, banks go belly up…..The ultimate danger.

    • On January 17, 2020 at 2:57 pm,
      OOTB Jerry says:

      For Queen and Country………..lol

  4. On January 17, 2020 at 10:16 am,
    bonzo b. says:

    Maybe this is a good day to sell my MMM, JNJ, RDS, and Exxon and put the money into GFG, NGD, MRRMF, IRVRF, AUY, VGZ, SSPXF, MUX, and DRD. Somebody stop me before I do something I will regret!

    • On January 17, 2020 at 8:22 pm,
      Excelsior says:

      That plan makes sense to me. 🙂

  5. On January 17, 2020 at 8:58 pm,
    Excelsior says:

    Cory & Erik – Good interview fellas. I agree that overly concentrated positions on drill plays that are only funded for one season are incredibly risky, and usually a binary event of sink or sail. This is why it is good to spread that risk over a basket of stocks, in case some take a nose dive like GFG resources has after their latest drill campaign. This is a good lesson for all investors to make note of. I had the same experience with Golden Ridge earlier this year, but thank goodness it was just a small “lotto ticket” allocation.

    I feel bad for the folks that go all in on stocks like this and get their clock cleaned (but not too bad because that is just full on greed to bet the farm on a drill campaign).

    Sometimes I see people boasting they are “All-In” on just one exploration company and sometimes have borrowed from a home mortgage (or worse a credit card), and then after the new reveal of the drill holes and stock price implosion, those posters are rarely heard from again… buh bye then….

  6. On January 17, 2020 at 9:48 pm,
    Excelsior says:

    Having said that, I have a small lotto ticket position in Northern Shield on their drill campaign at present. (and no I didn’t mortgage the house on it). 😮
    _________________________

    (NRN) (NSHRF) Exploration Update on Shot Rock and Root & Cellar Gold Projects – Drilling to Commence Shortly at Shot Rock

    by @newswire on 16 Jan 2020

    “We are very happy to be drilling Shot Rock shortly and eager to see the core,” states Northern Shield President and CEO, Ian Bliss. We are also most encouraged by what we keep seeing from the progress at Root & Cellar. This project is rapidly catching my attention the more we work on it,” continues Mr. Bliss.

    https://ceo.ca/@newswire/exploration-update-on-shot-rock-and-root-cellar-gold

  7. On January 18, 2020 at 8:41 am,
    The Hedgeless Horseman says:

    Over the last year or so I have found four explorers that I was willing to take a small to decent stake in, prior to drill results: Aloro Mining, Ethos Gold, Miramont & lastly GFG. Either they hit nothing or they hit smoke. Regardless, they all corrected HARD even though everyone except Aloro still had a decent to good amount of cash left in the till and/or multiple more projects. In essence I guess a point would be to always expect say a 30%+ decline on bad results no matter the underlying fundamentals. (assuming there was some kind of run up beforehand). If one sells ASAP after a decline, the loss is permanent. If one has a longer investment horizon and the company has a plan B then the loss on paper should at least get smaller with time… This concept is a bit hard to reconcile and know exactly what the best move is. Perhaps it’s simply to always wait for results unless one is very sure that the expectations are not unfounded at all (which is very rare)… But then again, where’s the fun in that 😛 (except probably making more money in the LT haha). Ps. NRN looks interesting and is a cool story!

  8. On January 26, 2020 at 3:16 am,
    oroyplata says:

    Investment recommendations by this guy are a great contrarian indicator. Novo’s chief fanboy, as shown in a recent infotisement https://www.thehedgelesshorseman.com/novo-resources/novo-resources-reading-between-the-lines-and-value-investing/ is clearly in love with the company and writes that he is “agnostic to the share price” and “forget about what the market is telling you”. These characteristics/views aren’t conducive to making money in the stock market. Not only was he wrong, so far, about GFG. About Aloro on 14/2/19 he wrote: “I would argue that Aloro’s market cap of $4.65 M with signs of a hidden Escondida type system, and a fully funded follow up drill campaign in the works, isn’t pricing in much of anything.” http://www.thehedgelesshorseman.com/gold-silver-stocks/aloro-mining-next-steps/ The shares were then .10. On 18/6/19 they were down to .03, briefly hit .06 a few days later, and haven’t been above .05 since. About Miramont he wrote https://ceo.ca/mont on 8/3/19 “God I love this stock” and on 9/3 “next stop 0.75”. At that point it was .52. It hit a high of .62 and on 2/4 was down to .12 with its highest point since then .25 on 10/5. Granted, 2 is a tiny sample size and he may have been right on other calls of which I’m unaware, but look out below when HH loves a stock and sings its praises! His heavy promotion of Novo, Irving, and Lion at current high prices suggests a sell. Here he advocates taking some profits when price goes up, but in his infotisements for these companies do not. HH won’t publish comments on his Website that offer any contrary views to what he writes, even when the comments are rational and respectfully stated. Questionable judgement and integrity.