The recent slaughter in the mining space has proven why it’s a good idea to have a broad ranging watch list of companies.
There are quite a few companies which I think have good fundamentals but who have been continuously fairly priced.
In other words I would like to own them but they were not “no brainers” because the market participants kept the price “fair” while I like them to be priced with a fat margin of safety.
But just in the last couple of weeks some of these “fairly” priced companies have been taken to the wood shed along with everything else.
For example I had no position in O3 Mining although I really wanted to really want to buy it. However, I felt that the company was somewhat fairly priced for the longest time. Meaning that the balance sheet strength, quality of management, quality of backers, quality of projects and their large land position was reflected in the price of the company relative to other junior companies. Thus, I reluctantly held off any buying because it wasn’t a “no brainer”.
Fast forward to the last couple of weeks and we saw the company finally being sold off hard along with everything else.
If I am not mistaken it hit an Enterprise Value of around US$15-18 M at the lows.
Considers that Agnico Eagle bid approximately C$26 for ONE of their properties (the bid for Alexeandria Metals) not long ago and O3 Mining ended up winning the bidding war which valued Alexandria’s portfolio at around C$37 M.
… Which means that one was able to buy Alexandria’s assets, and all other assets in O3 Mining for almost half of what just Alexandria’s assets were valued at, not too long ago.
That to me was a “no brainer”.
Same with Irving, Lion One and Novo Resources who have never looked better but have seen the price of each respective company cut more than 50%.
Also “no brainer” top offs.
Most recently, as in yesterday, I started buying Probe Metals for the first time ever. I have had my eyes on that company for a long time but it was always trading closer to fair value than most juniors due to the quality of assets and management.
Thankfully someone decided to dump shares in the last couple of days (and maybe still is) which allowed me to buy Probe Metals at an Enterprise Value of US$30-US$35 M.
With 3.4 Moz of resources in Quebec, Canada, that is simply a “no brainer” in my opinion.
Prime Mining with a MCAP of US$15 M is also a “no brainer” to me.
(Note: This is not a buy or sell recommendation. This is not investment advice and I am not a geologist. This article is highly speculative, forward looking and I can’t guarantee accuracy. Always do your own due diligence. I own shares in all companies mentioned which I have bought in the open market and am thus biased. Novo, Lion One & Prime Mining are passive banner sponsor on my site. )
The Hedgeless Horseman
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