Okay, so your RRSP is tied up in Air Canada and Bombardier and RBC and Telus. Borrrring.
Profitable, reliable, but boring. Let’s face it, 12% annual growth is not going to get you that hot barista’s phone number. Which is why the Venture exchange exists; to help middle aged guys get hot baristas phone numbers after their ragtag copper project explodes into a triple.
But finding that three-bagger isn’t easy. What’s out there that hasn’t been promoted to death, or already had insiders cash in early wins, or seen the market ignore good news as the stock trades at lows? What companies are oversold, undervalued, and waiting for that one big catalyst to blow them up?
Presently, there are a lot of them. The market has not been kind to Canadian resource juniors over the last month. For investors, the trick is to find the companies that are at the bottom of their trading cycle, hitting lows with good news being piled up, and are likely to draw investment when the big dogs are done with their tax selling for the year.
A piece of disclosure before we begin: All the companies I’m going to mention are Stockhouse client companies, though not every client will get a mention and no client company paid for inclusion in this piece. The reason we’re focusing on those companies is these are organizations we deal with every day, so we know more about them than others. Once you’ve sat with a CEO and learned their plan, and thrown all the relevant negatives at them and listened to their responses, you get a good idea of the likelihood a company will succeed (or otherwise), and what’s needed to get them to the next level.
It would be incorrect to assess this piece as surmising these are the most promising companies on the exchange; rather they’re companies we’ve looked hard at and that, to us, are value buys right now and show less risk going forward than others. Take it as an opportunity to learn about a handful of companies you’re probably not aware of, and move forward accordingly.
So let’s see if we can’t share some insight.
Boxxer Gold (
TSX:V.BXX,
Stock Forum): Looking at Boxxer right now, you’ll see lots of talk about the
DOK copper mining project. But Boxxer has something else going on right now that warrants a closer look, especially with the share price at a historic low. The company is punting on a mining comeback in the New Year (something Stockhouse is seeing from several other companies recently) and wants to essentially
repackage and flip low cost, promising properties. Less Boxxer, more Re-Boxx. Share price is down on no news and general market blahs, but at $0.015 per share, any upward motion presents a significant return.
Kootenay Silver (
TSX:V.KTN,
Stock Forum): General consensus is this company will have an operating silver mine sometime soon. Stock price is depressed but Kootenay has shown recent pickup in volume and price to go along with
recently announced drill results. Silver is one of those metals that has been neglected all 2014, and the recent Silver Summit was a major bummer for most, but at $0.34, and with Kootenay management getting its ducks in a row, go time for this player approaches.
Integra Gold (
TSX:V.ICG,
Stock Forum): Personally, I found meeting this exec team to be one of the most interesting meet-n-greets we had with a client company this year. A young group handling an old and beat up project in a new way, and that strategy is paying off. When we first talked to them, the stock was at $0.16 and hurting. They took it to $0.30+ and, though the market has cooled in the last few months, the company now
has this project much further along. They’ve acquired a mill which will shorten the dev timeline significantly, they just hit
new zones of mineralization, and the share price is where it was back in January, presenting real value for opportunists.
Aldrin Resources (
TSX:V.ALN,
Stock Forum): If you’re looking to play in the uranium space, and there’s an increasing buzz around that space right now, Aldrin is a great vulture opportunity. The company has already gone through a
6 to 1 rollback, the share price is at a low, they’ve just raised a half mill with a view to gunning exploration forward in 2015 and long holders are pissy enough to sell for a loss – all of which makes now the sweet spot for a turnaround punt. If Japan starts turning its nuke plants back on as expected in the near future (and/or someone in the Athabasca makes a big acquisition and kickstarts the industry), there’ll be a real sector-wide shove following that news, and Aldrin could see a nice coattails run.
Strata-X Energy (
TSX:V.SXE,
Stock Forum): Yes, we know, everyone hates oil suddenly because it’s down to $63 a barrel. Let’s go deeper, however. Strata-X announced yesterday that it’s
deploying a drilling rig at the Blue Spruce #1 well in the next few weeks, with finding and development costs of $8 per barrel, and production costs to come in under $10 per barrel, for a $44 per barrel netback at current prices. Unless world oil prices go sub-$30 per barrel, there’s a play here worth exploring. Add to that Strata-X has just become Illinois’ first approved hydraulic fracking operator, and that other holes are already in controlled production testing and $1m in financing has been raised for the coming year’s exploration, and the current 52-week low price range is a gimme.
Asher Resources (
TSX:V.ACN,
Stock Forum): Total punt. 52-week low at $0.035. Friendless with a market cap under $1m. On the upside, Richard Buzbuzian pounding out the news as
drills turn in Nevada and the float is a tight one. Consider it the Canadian equivalent of an OTC penny play and speculate accordingly. Any positive news and this thing lights up like a pinball.
T-Bird Pharma (
TSX:V.TPI,
Stock Forum): Astonishing lack of market love for this grown up weedco play comes from a distinct lack of news. This is a fully licensed MMPR supplier looking to ship its first batch of product in about ten minutes, and the company is looking to be a premium priced, inexpensively grown, high quality medicinal option for genuine medical users. Market cap is lower than Supreme Pharma, which isn’t licensed yet, despite having just picked up an
experienced capital markets biotech CEO and former top GMP Securities biotech analyst as their new COO. Every MMPR is cheaper than it should be right now, but T-Bird is the value pick – which makes it a potential prime target for the first takeover in the sector.
Poydras Gaming Finance (
TSX:V.PYD,
Stock Forum): The markets don’t understand this financing play but they should spend a little time on it. Poydras reaches out to Native American casinos (of which there are many), and helps them finance upgrades (of which many are needed) by placing slot machines and sharing in the revenue. Currently the company has
326 such machines in Oklahoma and California, and has more on the way. The organization recently
acquired Integrity Companies and their network of machines and partners for $17m in cash, debt and stock, so there’s a bit of an overhang involved but significant growth coming from that deal (Q3 revs were up 40%). The Integrity deal has created a set of financials that look harsh, but I see Poydras as a ‘payday loans lender to the casino world’, in that the longer it’s in business, the more revenue is going to come. Meanwhile, stock is at a low. Sloppy float at 130m shares out, but with a two-year payback on every machine and contracts stretching way beyond that point, this is a nice RRSP candidate.
Anfield Resources (
TSX:V.ARY,
Stock Forum): If you think uranium is buzz-heavy and likely to appreciate, Anfield apparently has a project with
4.6m lbs of the stuff, and more assets coming online besides. Summing up the opportunity in two sentences, Corey Dias, CEO of Anfield stated in a recent press release: "We are very pleased with the results of the
[NI 43-101] for the Velvet-Wood Project. As recommended in the report, after completing the purchase of the Project we intend to move forward with both mine design and feasibility studies for the Project, as we expect that it will be an important source of feed for the anticipated restart of the Shootaring Canyon Uranium Mill.” Important note: Anfield doesn’t own the property yet, but has signed a
term sheet for the credit needed to get it.
CanAm Coal (
TSX:V.COE,
Stock Forum): This is a real ‘forest for the trees’ situation. Working against it: It’s a coal company that has gone into debt to acquire other coal companies to help fulfill contracts to sell high grade premium priced coal to power companies in the US southeast. Also, delays on the Gooden Creek #2 mining permit left the company having to buy from third party companies to fulfill sales contracts. Also, the company took a big write-down when it converted a bunch of debt overhang to equity. All of this contributed to make
Q3 results look shambolic. Now the upside:
New frac sand project brings diversity and changes company into an ‘energy services’ play rather than a coal play. Debt to equity ratio moved from 76:1 on June 30 to 8:1 a few months later. And
the Gooden Creek permit has now landed, which has production now on track to make Q4 much happier. At just $0.025 per share, lots of room for fun.
Avivagen (
TSX:V.VIV,
Stock Forum): The biotech waiting game is not unfamiliar to Canadian investors, and this is one company that has been playing that game for some time. Their full oxidized beta-carotene tech vows to
deliver many of the benefits of antibiotics to animals without the negative side effects, with early research showing a reduction in bovine respiratory disease, pig diarrhoea, and with big gains in growth, disease resistance and coat/skin health. If the tech can be proved, the potential livestock markets for something that negates the need for antibiotics would be immense.
Mid-raise, the stock is moving on up but still at a bargain price.
IC Potash (
TSX:T.ICP,
Stock Forum): Remember when potash was a thing? Well a return to those days might not be too far off; at least if Cartesian Capital Group’s
recent $10m strategic investment in IC Potash is any indication. IC Potash’s game is Sulphate of Potash (or SOP), which is a high demand non-chloride fertilizer product used in high value crops and areas of high salinity and or arid conditions. The company says it is ideally positioned due to the ‘
world’s lowest cost’ nature of their operation. ICP was crushed late last year during the Russian kerfuffle, like all other potash producers, and the stock price has been largely flat in the time since with a notable recent pickup in volume. The big money says ICP’s time is coming. The little money is increasingly catching on.
Global Cobalt (
TSX:V.GCO,
Stock Forum): Long holders see the potential of Global’s Russian Karakul cobalt, copper, bismuth, silver and tungsten project as being the key to unlocking big returns in 2015, but those long holders have had to gird their loins through the last year as Vlad Putin did its best Napoleon impression and hinted at, you know, taking over half of Europe so he could take more shirtless horse-riding selfies. Bottom line, Karakul is just over the border from China which REALLY wants what Karakul holds, but can’t do business with Russia to get it, and Russia REALLY wants Karakul to generate dollars, so both need the Global team to get in there and do business. Also, because Global CEO Erin Chutter is a strong CEO, she’s
added diversity to the roster and has added
more projects in Ontario and Idaho, which position the company well as a potential Tesla supplier. Market yet to recognise, stock at a low, proceed with diligence.
Focus Graphite (
TSX:V.FMS,
Stock Forum): Not a Stockhouse client, but an interesting play at a time when vulture capitalists seem to be circling. Recent raise was a little stymied when the stock price unexpectedly slumped but second tranche likely to come. Experienced players will know that when a geologist CEO helms a company, the story sometimes gets lost on the market due to a technical (as opposed to promotional) focus, and that may be the case here. But if FMS can come out of the gates post-tax loss season with their financing filled and the Lac Knife project ready to march forward, today’s stock price would seem a heck of a deal. IR boss Adrienne Mauriks told me today, “We are the only ones who can speak to any battery manufacturers realistically as we have the team to make spherical graphite (SPG) in house. All SPG is made in China currently, with some nasty processes, and the recovery rate in China is 30%. Ours is 75%, and we can improve that when we’re moving tons and not kilograms.
”
Artisan Resources (
TSX:V.AEC,
Stock Forum): Stock doubled on announcing an LOI that it was
taking out MOGL Corp and Spur Energy Group in a stock and dinero acquisition. But when that deal moved to completion, at a $0.25 share price rather than the $0.43 the stock had climbed to since the deal was announced, a sell-off began that was snowballed by global oil price drops. But smart money is looking at Artisan’s current share price as being way oversold, and a subsequent $4m raise @$0.27 to finance 2015 drilling appears way over subscribed, if a
recent upsizing announcement is any indication. A year ago, Keith Schaeffer called this ‘
the perfect junior’. If you want to be smart money, follow smart money. Artisan at a discount is a nice way to enter 2015.
Enerdynamic Hybrid Technologies (
TSX:V.EHT,
Stock Forum): Consider this a starting point: EHT has a deal to install
125k solar/wind hybrid power systems in Senegal over the next five years, which should reduce the government’s energy costs by US$400m annually. They’re doing the same for 4500 Ontario homes, which will
supply 4600 megawatts of energy to the Ontario grid at a guaranteed price. Previously, they’ve installed
a 500 kilowatt AC solar system to the same grid with a 20 year purchase agreement. What does all this mean?
Profitability by Q3 of 2015, says management, and a forecast of $40m in revenue for that year – which would match their current market cap. Stock has traded north of a buck in the last few months, but a rough market and a relatively new story has this one now at $0.60. Get it on your watchlist – the next big deal they sign could be the one that takes them to profit.
TomaGold Corporation (
TSX:V.LOT,
Stock Forum): TomaGold shocked the world when it announced the giant IAMGOLD company would partner with it on the Monster Lake property in Quebec. IAMGOLD liked the
results it saw early and recently agreed with Toma to extend its deal to May of next year, allowing it
to pump an extra million bucks into the exploration budget and move things along. Meanwhile, the Toma wheeler-dealers brought in another deal, with the project operator of their Gold Reef Mine in Arizona making a
3000-ton per month purchase contract with the giant Freeport McMoran.
Inexco Mining (
CSE:C.IMC,
Stock Forum): The first CSE deal in this list is a weed deal, natch. So what is this weed deal?
Worldwide Marijuana, which Inexco is basically going to become any day now, has locked in the right to purchase a 46k sq. ft. building suitable for the growth of medical marijuana in Trail, B.C., with approval for a 28k sq. ft. expansion, which is currently the basis of a Health Canada MMPR application process. Should that MMPR hit, Worldwide gets to take over a building that cost well north of $7m to build originally, and was recently appraised as being worth $6.4m... for $2.2m. CEO Craig Engelsman is putting together
a firebreathing board intended to be politically connected and global in nature. And the dude is RELENTLESS in his pursuit of investors and news and deals. Like, relentless. Trading at a low, news coming. Check out the 10m share float and tell me this thing isn’t wired to run..
Stay tuned for more in this series in the weeks ahead.
--Chris Parry
https://www.twitter.com/chrisparry