Profit Prospect Letter on RGTProfit Prospect Letter - 4 New Picks and Portfolio Update
This bull market has proven to be very profitable for us even though we don't bat 100%. The large winners we have had in our camp have far outweighed the poor decisions. I'll get the bad calls out of the way in the portfolio update but there are a few deals worth watching. I have 4 Companies that I think are worthy to have on the screen – I have let you know my strategy on each pick.
New Plays Worth Watching
Underworld Resources (UW-TSXv)
This is a brand new IPO from March 5th. It is an Australian focused gold deal with only 10M shares issued and outstanding. I'm led to believe the projects in company allowed them to get listed and are good projects but they won't be the flagship. Some of the market participants from Full Metal Minerals (FMM-TSXv) are in and it only has $10M market cap at $1.00. I am not buying this right at this moment (I may really regret this though). I'm hoping to get in between $0.70 - $0.80 but will let the market tell me where to buy 100K shares even if it is at higher levels. Sooner or later - I'm sure they will find an asset that justifies a much higher valuation and even if it goes to half of where FMM went ($100M market cap), this will be a BIG winner. This deal is very tight - I think there was only one lead broker who placed the whole $1.5M financing so they know where all the paper is. This is a superstar team and it is very rare you get to participate in a market with such a meager market cap. Here is list of directors, and it is a Cracker Jack team; Michael Williams, Marcel De Groot, Daryl Cardey, Robert J. McLeod and Jeff Sundar. Do not overpay for this stock – this is one you build a position in slowly but surely averaging up and or down. The Company would probably have to raise funds on a new acquisition so look for that to take place at a discount to market if and when it does happen. A financing truly tells you what a stock is worth - so if you can be patient, wait until then.
Western Uranium (WUC-TSXv)
What do you get when you put Lukas Lundin, Ed Flood (Robert Friedland right hand man) and 30M lbs of Uranium in Nevada? Probably a much higher stock price. Welling West just put a $4.80 target on the stock with a base case of $50 Uranium and 65% of the deposits NPV. What???????? Isn't Uranium at $85? Does a North American asset deserve a 35% discount to NPV??? I don't think so to both! To top that off Haywood Securities is closing a bought deal at $3.80 per share and you can buy the stock at $3.50 right now. Bob Bishop basically said in his latest newsletter this is a no brainer - I would have to agree. I think the only question is how long until Wellington West increases their target to $7.50 per share based on $75 Uranium and 80% of the NPV. Lots of exploration upside to this deal as well. I even put it into my Mom's and Dad's RRSP account at these levels.
Rockgate Capital (RGT-TSXv)
If you like 10 baggers, this one has a good kick at the can but not for the faint of heart (Aren't they all like that?). They picked up an old Cameco uranium project in Africa that apparently holds some pretty unbelievable (hair raising) historic data. The only thing I have done wrong with this play is not alert my readers earlier. I am long at $0.40 in the private placement and bought more free trading stock in the $0.70's. The stock has gone straight up since to around $2.50 and I know that people in the PP are still buying stock at these levels. Great sponsorship on the deal, sponsorship that would send this to the moon if they could confirm historic data. $5M in the bank and only 20M shares outstanding fully diluted. If you are looking for an entry point on this - the $0.40 cent financing comes free trading on May 15th - so I imagine their will be some pressure on the stock leading up to that time. That is still two months away though - so their could be lots of spec left in this and results could trickle out in a month. As I said, I liked it better at $0.70 of course but numbers on this play coupled with historic data, structure and market sponsorship makes RGT especially intriguing. I will watch closely for news.
Happy Prospecting
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