Balancing out downside risk vs upside potential using a new exploration junior as an example
Erik Wetterling, Founder and editor of The Hedgeless Horseman joins me today to share how he focuses on the downside risk in companies when going through his due diligence. We use a new Company, Mayfair Gold as an example of where Erik sees limited downside risk based on the Property and team.
Eric brings a lot to the table. Thanks for his regular input
Glad to hear you think so! It seems most want to just hear what the next “ten bagger” is most of the time unfortunately :P.
All the best,
Erik
Agreed Marty. It is nice to get Erik’s thoughts on managing or at least knowing the risks when getting into a position, and how to monitor the risk/reward setup as things develop with a company. Good stuff!
Bonzo sneers at margin of safety. I like high risk stocks that go up 100 fold or lose it all like NULGF. Bonzo is unmasked, un-vaxxed, and unafraid. Erik, do you prefer Irving or Novo at current prices?
Haha, live by the sword die by the sword Bonzo. I actually have more NUG than I should as well. Good question. IRV has one of the best portfolios in the world given the amount of top tier projects under their control now (and Newmont, Sumitomo as partners)… The thing is, as has been for a while, the issue of having one drill rig. Omu alone could sustain at least 6 for example… Novo on the other hand has gotten ridiculously cheap thanks to the rise in NFG. If Beaton’s Creek “just” becomes a decent operation then it’s probably the best long term risk/reward in the world. It of course does not hurt that it’s pretty much the best jurisdiciton in the world. In shor t I love both but Novo’s potential, stage and jurisdiction puts it ahead IMO.
All the best,
Erik
Thanks, Erik, for your thoughts on Novo and Irving. I love both but have 3.5 times more shares of Novo, so perhaps I should get more Irving. I hope NUG finds another Betze-Post type deposit of 50 million oz of gold and sells for $20 a share, but if it goes to zero it won’t kill me as I have made so much on NFG , Eloro, ESKYF, LAB, and Goliath this year. Skal!
bonzo………. is a great guy……… Indiana Hoosier…. from the Old school, when brains were brains….. the the idiots of today, are a bitcon short of a full deck…. go bonzo, you the man of the evening… lol 🙂
Through HH a chair………. and say it was from Bobby…. lol
Throw…. freaking computer… lol… 🙂
Jerry, although I got an M.A. at Indiana U. and spent 3 of the happiest years of my life in Bloomington, I was born in Texas and lived here all my life, except for grad school, and think of myself as a Texan. Go Hoosiers; beat the Buckeyes!
bonzo……… you are a true hoosier……. lol….
Bobby, told me , I could Knight you King of TEXASHOOSIERVILLE…..
Bobby….did have his last days at TEXAS TECH…….. lol….. you and the STATE OF TEXAS, were TRULY BLESSED…… Bobby Was the BEST…. JMO….
I’m also a Hoosier by birth, but wasn’t in Indiana long.
We will just call you.. Ex The Short…………. J the Long(timer)… 🙂
Haha! Good one J the Long (timer).
Larry Bird was a great Hoosier.
Ditto Terry……… you are 100% spot on….
I don’t see why you can’t have both high reward and lessened risk. There are a lot of PM mining companies out there with promising projects. Many could skyrocket on the right drill results. So why not pick those with more protection to the downside?
That’s a good point, and I believe the point he was making was that when there is some known resources or assets underpinning a valuation, then this is less of a risk than just a pure greenfield discovery drill play for example, because the ounces in the ground, or any infrastructure in place, or a producing mine, etc… are not going to let the stock go to zero. Many advanced exploration, development-stage, or production-stage companies have the downside protection of real assets, along with the high reward of leverage to the metals prices, growth through more exploration or resource expansion.
(NEE) Northern Vertex is a good example of a “margin of safety” play with a producing asset, growing resource base with exploration around their Moss Mine, and yet they also have a secondary Hercules project to explore, after their acquisition of Eclipse Mining. So one has the underlying assets to underpin the value, but then all the exploration upside as well.
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Markets Need To Shift Attitudes For Safe Investments – The Daily Dive feat Doug Hurst
May 27, 2021 – The Deep Dive w/ Jay Lutz
“Today on the Daily Dive, we sit down with Doug Hurst, Chairman of Northern Vertex Mining Corp (TSXV: NEE). Doug joins us today to discuss the topic of gold and its position as a safe investment, as well as to give a high level overview of Northern Vertex and the benefits of the recent merger with Eclipse Gold Mining.”
“Northern Vertex is a cash flow, production, and exploration focused gold junior, with a current focus on the Walker Lane Gold Trend of western Nevada and Arizona. The company is currently focused on operating the Moss Mine in Arizona, while aggressively exploring the Hercules Project in Nevada.”
Well that explains where the Brixton selling is coming from. 2M shares each from ES and an Ontario holding company. Hopefully that’s all out of the way now
So is Eric Sprott exiting then? I didn’t see the news yet…
No. Don’t think that’s the case. ES and the holding company each still hold 22.35M shares
He sold 2 million shares at .20 (part of them to me). He has 22M left along with 11M warrants.
Ah… here it is… He’s just lightening up a bit on Brixton.
> Thanks for the heads up Wolfster.
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Eric Sprott Announces Holdings in (BBB) (BBBXF) Brixton Metals Corporation
@newsfile on 21 May 2021
“Eric Sprott announces that today, 2176423 Ontario Ltd., a corporation which is beneficially owned by him, disposed of 2,000,000 common shares of Brixton Metals Corporation over the TSX Venture Exchange (representing approximately 1% of the outstanding shares on non-diluted basis) at a price of approximately $0.20 per share for aggregate consideration of approximately $400,000.”
“Mr. Sprott now owns and controls 22,345,167 common shares and 11,125,000 common share purchase warrants representing approximately 11.3% of the outstanding common shares on a non-diluted basis and approximately 16.0% of the outstanding common shares on a partially -diluted basis.”
https://ceo.ca/@newsfile/eric-sprott-announces-holdings-in-brixton-metals-corporation
It’s funny that it took 4 months to finally slightly take out its January low and did so with the RSI diverging bullishly/not confirming despite the probable negative effect of Sprott’s sale on the confidence of the average retail guy. So, it looks like weak and/or dumb hands have been thoroughly wrung from the stock and the rising accumulation/distribution line since March backs that up. In fact, that line steepened to the upside this week despite the new 11 month low.
https://stockcharts.com/h-sc/ui?s=BBB.V&p=W&yr=5&mn=7&dy=0&id=p14263678149&a=598964415
Looking forward to Brixton and a number of the junior Silver/Gold explorers to play a little catch-up with the larger producers and royalty companies; as many of them have continued to be muted despite the increase in the metals prices. Hopefully the selling pressure is getting exhausted at this point.
If I had something that was I taking some profits on or had some cash on hand I’d have used this opportunity to buy more of it too…..lucky you
A little write up and short interview about black wolf copper and gold
https://ceo.ca/@goldtelegraph/blackwolf-copper-and-gold-looks-to-unlock-value-in-2021
Oil continues to press it’s move higher, up to $67 now…
…but remember, the inflation is only “transitory” according to the FED.
Dr Copper is still up near it’s highs at $4.66, Platinum & Palladium are still doing well, and the soft “food” Commodities are still up sharply from where they were a year or so back.
We just stocked up on food for the next 3-12 months in many categories (especially in those that will keep for a while), as the prices at the stores are going noticeably higher, and even the average Joe and Joanna are starting to notice the inflationary pricing pressures on goods & services. The Dollar weakening isn’t helping the cause either…
Has anyone else noticed that the “meme stocks” like GameStop and AMC Theaters are back in play again the last few weeks.
Look at the speculative moves higher in AMC lately. It was up over 35% from it’s already lofty levels just today alone, and is up substantially over it 200 day moving average.
Investors must be anticipating a LOT of pent up demand for people to cram themselves back into movie theaters…
Its interesting that the lamestream financial media was simply enthralled with the moves in the Reddit/WallStreetBets/Robinhood #MemeStocks phenomenon in Jan & Feb, but if anyone looks at that AMC stock chart posted above, it has become far more loony and overbought than it was during that phase of the #ShortSqueeze.
Over the last year the speculative froth in those high flying mania stocks like GameStop, AMC, Tesla, Cryptos, Semiconductors, the general stock indexes, collectible, art NFTs, etc… is the bell ringing that we are reaching the late stages of this #EverythingBubble.
Been mentioning the meme stocks on the all news station the last couple of days during the business updates so it’s not going completely unnoticed
Still no US listing for Mayfair