HADES – “When you’re going through hell, just keep on going.”
The other saying that comes to mind – this one is mine: “No such thing as smart money; closest thing is long money.”
If you are in Hades, long might be a week. On Mount Olympus: it’s a five-year-strong-hand hold, or 15 years … or 50.
I am a 54-year-old, on-site researcher of miners, mine developers and prospectors. I have friends and colleagues who are asset managers, geologists, investment advisers, financiers. Arthur “Rick” Rule of newly-combined Sprott Inc. of Canada and Global Research Investment Ltd. of the USA says, “Buy fear. Sell hope.”
That would mean plunging into the spoils of uranium prospectors and miners. Or doubling down on anything in your portfolio that is hammered.
(Please tag your investment choices at the bottom of this article this weak-handed week as most exploration and commodity equities go through hell.)
Here is what I look for: Equities, commodities (potash, molybdenum, tungsten and lithium, for starters) and country regions (West Africa) that are gaining or holding their own in the nuclear sell-off. I use a tool, this one on Stockhouse is a good place to start, to screen for companies that are gaining or EVEN the past three days. The Tool.
1. I eliminate impulse gainers: this week that would be coal companies, most non-nuke energy companies and other gut-flex fool’s gold. (On the flip side: I am puzzled why geothermals are getting whacked. … Oh, right, I remember: it’s like gold. If the world ain’t here, how do you use the stuff?)
2. I seek a sense of what is worthy and whom I know at companies that do not ring a bell. (I think of that line in the back of the Volkswagen bus, Alan Arkin in “Little Miss Sunshine” when he tells his brat grand-kid, “A lot of women, boy.” Well, I know a lot of miners, but not all of ‘em.)
Today I notice two unfamiliar names: silver and copper prospector Dia Bras Exploration (TSX: V.DIB, Stock Forum) in Peru, Lion One Metals (TSX: V.LIO, Stock Forum) in the Fijian Islands; and one familiar one, lithium mine developer Li3 Energy (OTC:BB: LIEG, Stock Forum) in Chile. I own none of these equities but have been tracking Li3 Energy and its Bolivian and Italian connections in our Ticker Traxsubscriber service.
Li3 I find interesting after meeting most of the principals last week. Its Maricunga project is in the Top 10 of lithium brine deposits and the $45 million market worth does not reflect the potential. I think I know why. The 38-cent shares are on the over-the-counter USA bulletin board, and the company is in the process of raising cash with 30-cent stock and warrants. The extra cash is necessary to develop Maricunga but the ongoing equity placement will dilute current shareholders. As for the over-the-counter and so-called Pink Sheet USA stocks in general, they are hit-and-miss and are widely perceived, in Canada and Western Europe, as “under the table.”
Beef on table
With any luck, CEO Luis Saenz (of Bolivia and living in Peru) and his Li3 will raise $12 million and seek a listing on a commodity-friendly exchange. I told our Ticker Trax audience that the Li3 crowd includes some faces I have not seen in five-plus years. They are a formidable bunch with roots in Switzerland, the United Kingdom, Italy, Colombia and Peru. I do not own the shares but told our Ticker Trax audience I would like to purchase some if they decline to 35 cents.
3. I go to my notebook (iPad, laptop, Droid) and scan for anything relevant from any contact whom I either respect or at least can tolerate. I see that I had dinner with Colorado doctor of geology Quinton Hennigh (and three others) at the PDAC alcohol and mining festival last week in Toronto.
Dr. Hennigh is behind a few companies, mostly as a senior consultant and at least one as an executive. These include Evolving Gold (TSX: T.EVG, Stock Forum), EurOmax Resources (TSX: V.EOX, Stock Forum) and Gold Canyon Resources (TSX: V.GCU, Stock Forum). It says in my notes, and I quote this from our dinner Sunday, March 6: “I lose no sleep knowing (Gold Canyon’s) Springpole will be 10 million ounces,” he said to me when I asked about a few of his companies. “This is going to be the biggest project ever in Canada.”
Dr. Hennigh, schooled at the Colorado School of Mines, was named to Gold Canyon’s board of directors on March 4. The economist geologist has been “refocusing” exploration as a consultant for the Springpole Gold Project in Ontario, not far from Red Lake, since 2009. His words made a pleasant dinner at a Toronto steakhouse even more pleasant. This is because I already owned shares of Gold Canyon, on the (January) advice of another doctor of geology from Stanford University who is keen on alkaline intrusions that might host vast quantities of gold … sort of like Canada’s Archean Shield gold deposits.
I bought more GCU shares since dining with Dr. Hennigh. (My purchases of GCU thus far: 4,200 shares Monday, March 14 at $2.34 a share; 2,000 shares March 2 at $2.27; 1,200 shares March 2 at $2.27; 6,000 shares Feb. 8 at $2.53 a share; 7,500 shares Feb. 1 at $2.53 a share. All prices in U.S. dollars)
Oh, and the postscript: Gold Canyon Resources today reported shallow gold assays that included 100 meters at 7.2 gram per metric ton. “We hit a ton of gold,” Dr. Hennigh just e-mailed me. The Canada-traded stock at this writing Tuesday was rising 10 percent to $2.54 or so a share. Now that is nuclear.
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