[petejh]

Plenty going on I could mention, here are 3 that are actionable:

I opened a short-term trade in Adriatic Metals @ £1.15 on recent weakness. Technically it was showing a divergence on the macd-h, had hit a significant fib retracement level, had dipped below a long-term support/resistance level (@ 1.20) and was showing oversold on the rsi. With those signals and knowing the company fundamentals well I can be fairly confident that it's probably bottomed barring any catastrophic event. I originally invested in Adriatic in early 2020 and planned to keep hold until they completed their Bosnian silver/zinc/lead mine and production in 2023. But sentiment ended up tanking in late 2021 on political instability (Bosnian Serbs threatening to break-away, with Russian backing) so I sold in late 2021 for a decent profit. It was a shame as it's a genuinely world-class project and one of the best silver/zinc projects currently on the market. Fully funded to production and with good levels of management and institutional ownership (European Bank of Reconstruction and Development, among others). There's a bit of a sentimental attachment for me - during the war in 1995 I was a fresh-faced 20-year old based not far from where their new mine's located. It's good to see a project that helps the region progress and this mine will be Bosnia's largest exporter, contributing 1.5% of the country's GDP. The ceo Paul Cronin seems to be one of the industry's good eggs and doing things the right way in terms of community engagement and environment. Overview of the project from their corporate relations guy: https://youtu.be/1o54G7-_Ero?t=9

Free cash flow starts next year, quickly ramping up to £200m+ per year, on a current market cap of £315m. So Adriatic's at a very decent entry price here. They're in the dip on the Lassonde Curve with less than 12 months to production so price 'should' do well from here starting pretty much from now (there are no guarantees ofc). I have other needs for my invested money so my plan is to sell for a short-term 10% profit which, if the rebound momentum continues in silver's spot price (movement in silver tends to move Adriatic) then I expect to hit my target in the next 2 weeks. If silver goes on a rip I'll hold a bit longer but doubt I'd hold beyond autumn.

Adriatic Metals. I ended up selling that trade for a quick 10% gain. I've repurchased them for the third time earlier this year at around £1.65 - 70 for 1.5% of my portfolio.
Join the dots here. The NPV of Ruprice when it goes into production in November of this year will be close to $1bn. This valuation is based on the now out-of-date resource estimate and the DFS (definitive feasibility study) from 2 years ago.
The lassonde curve reflects the journey of a minor from exploration success, through development, into production. It reflects excitement of the discovery, increase in resource estimates, then boredom and risk of executing a development project on time and on budget while trying to secure financing. Look up Lassonde curve for an explanation.
A miner will typically be valued at 0.5-0.7 x NPV up to production, to reflect execution risk, inflation, cost overruns, technical risk, commodity price downside etc. etc.

Adriatic have executed perfectly - this release from yesterday is what you rarely see with miners. They remain on track for November production, total build cost is finalised and within budget, not needing the contingency; offtake for 85% of their zinc/silver/lead is already agreed since 2022 with four major producers/traders for the first 2 years of Ruprice's life (the remaining 15% of product to be sold on the open market at spot - including gold and copper at attractive prices); estimated revenues given by the DFS/Sprott/Cannacord are based on realistic commodity prices (some now lower, some higher, but all realistic).

The narrative is about western supply chain - a western jurisdiction supplying western industry with base metals for refining within Europe (although some portion of the zinc will end up going to China for smelting, the remainder Europe - assuming energy prices don't shut down the remainder of Europe's zinc smelters... in which case China will take it all).

The upside, based on the existing resource going into production this November is from easily 50%, to up to a double from current price within the next 12-18 months, imo.
The really exciting upside however is the resource expansion from the drilling in what they've called the NW extension of Ruprice, which was announced in drill reports earlier this year. The grades within this new zone are very high. The Ruprice resource estimate will be updated next month and will include drill results up to April this year - which includes some of the high grade NW extension drilling. Drilling of the NW extension has accelerated since April's high grade discoveries and will be ongoing through the remainder of this year. Expecting a significant resource increase and life of mine extension next month, with further growth to come. Current life of mine given by the DFS is 10 years but the reality here is a tier 1 mine running for multiple decades, through an almost universally anticipated strong base metals demand cycle.

The downside is Bosnian political risk - Bosnian-Serb nationalism backed by Russia/Russian friendly actors stirring tensions.

All the information on valuation is out there - search Sprott for their note, and Cannacord Genuity for theirs - both notes will soon be out of date following the July resource update. The Adriatic website has the latest construction update, inc. videos for those that like to see the building of an underground base metals project from scratch.

In my opinion this is a screaming growth & value share at current price - on a par with Alphamin below 60c. As per Alphamin during their development, the management at Adriatic is top notch and have executed without fuss and hype. They've kept the hype almost completely below the radar by avoiding AIM and its idiotic crowd, listing instead on the main LSE and on the ASX where mining knowledge among investors is more sophisticated. To anyone who already owns, I'd not put all eggs in one basket due to Bosnia/Serbia/Russia political risk. To anyone who doesn't I think Adriatic make a great investment here.

Update on CTM in case anyone was tempted.. last night they announced a 6 months delay to the DFS (the final feasibility study required before a final investment decision to proceed to construction) for their nickel sulfide project. This on top of previous delays to the DFS. That, combined with market jitters, suggest this could go much lower back to the 70 area. Long term, it's a top quality asset that will ether get bought or JV'd within 3 years. Short term, further weakness possibly ahead. A very good opportunity for the brave with a 2-3 year view.

Various shares in my areas of interest are breaking down below long-term support lines as the financial sector fallout continues. I opened a (tiny, 0.025%) position in bitcoin miner Argo Blockchain two days ago on a combination of technical signals that suggest a turnaround. My sell target is 32p.

Credit Suisse the next over the cliff edge..?

CTM went to the 70s. Last week they announced they've renegotiated the offtake agreement they had with Vale (major base metals producer) whereby CTM have regained 100% offtake rights over their nickel: https://hotcopper.com.au/threads/ann-ctm-acquires-jaguar-offtake-rights-in-pivotal-transaction.7435504/

This is very significant news - previously CTM were somewhat hamstrung by Vale having control over a large % of the nickel from the Jaguar project. This renegotiation of the offtake agreement means CTM are now a much more attractive buy-out target prior to Jaguar going into production, alternatively this opens CTM to take Jaguar to production with financing partly coming from more attractive nickel offtake agreements than the previous Vale one, with major car manufacturers or commodity traders, thus minimising dilution of CTM in any future rounds of capex funding.
 
Price was cheap when it dropped to the 70s under the previous offtake terms; it's cheap under a dollar under the new terms. Short term (this year) expect nickel commodity price volatility on news of surpluses from Indonesia which will affect all nickel explorer/developer stocks - take advantage of weakness in the quality ones like CTM and PNRL. Longer term, nickel sulfide in 'friendly' jurisdictions like CTM's Brazil and PNRL's Botswana are where western industry wants to be purchasing.

All the work has been done for you if you search 'Sprott, research, CTM'. Imo, an easy double from here within 2.5 years if you can sit through potentially watching your holding suffer in a not-guaranteed recessionary market when everyone thinks the world/industry is ending. Alternatively you could try to time the maybe-bottom of the market, good luck.

That said PNRL really botched a recent raising. Short term balls-up.

PNRL have now secured financing as of last week and are funded to drill out part of Selebi. Anyone who took advantage of the weakness at $1 is laughing. I'm a holder from $2, and will be holding through the next 12 months as they begin drilling the areas shown up as conductive in the EM survey of Selebi and Selebi North. We'll soon know whether those conductive plates are nickel sulfide or something else of no economic value - I've no strong reasons to believe they aren't and many strong reasons to believe they are, based on who else is bullish about this. Could it be an elaborate pump and dump, of course, never rule that out. But the calibre of people who are pumping suggests that's much more unlikely than likely.

For the latest presentation see this from Boris Kamastra (who is former Chief Operating Officer for Alphamin, took AFM through their development into production):  https://youtu.be/I9n0kqgdtfM?t=7869


TLDR by risk lower to higher:
1. ADT large upside potential, now very much de-risked as they enter the final mile to production and a 1 x NPV re-rating valuation. No currency exchange risk as they're listed on London as well as the ASX.
2. CTM advanced stage explorer/early stage developer. Regaining 100% offtake de-risks financing somewhat. The DFS is due out end of this year - once that's out the gun goes off to finalise financing and start construction, or a potential buy-out by a major. Currency risk A$ to GBP is unknowable (listed on the Australian ASX).
3. PNRL the highest risk of the three - early exploration stage (although within an existing resource so not highest risk greenfields), with the largest upside potential should those conductive plates be proven by drilling to be nickel. Currency risk if pound strengthens against C$ (unknowable).

AFM, PMET, Filo, NGEX all cruising, still long all. Filo and NGEX both due more drill results v.soon. I won't chase but I own a shit-ton of all four from much cheaper.

[petejh]

A heads up on NGEX. I got in @$5.08 in April this year on the day the Potro Cliffs discovery hole was announced.  NGEX will be announcing results of follow-up drill holes from Potro Cliffs within the next week or two, as well as results of drill holes at their more advanced Los Helados deposit. The Los Helados deposit is an advanced-stage undeveloped copper-gold deposit in the Andes, in the same district as Filo, and underlines much of NGEX's market cap. The Potro Cliffs discovery is potentially a Filo-esque discovery next door to the Filo discovery, and it's in the early stages. I'm very confident about Potro Cliffs, and liken current price to buying Filo at $10 in terms of potential and risk (risk is low for an explorer in S.America - among other factors, the Lundin group provides stability here).

Recent investor presso here from Stockholm (ngex is a Lundin group company - Lundin family is half-Swedish and have a strong investor base there). A 12-month timeline could see this much much higher.
https://player.vimeo.com/video/838451578


Bonus idea for anyone into higher-risk speculation (I'm not taking part).

Cornish Metals finally reported this morning on the remaining holes for United Downs. Short version - the grades and widths are not good enough to economically mine the lode they've drilled.  Share price reacting accordingly. Happy now that I sold 50% around the recent high and took profits. If you were in it for a short-term win, then that day has now passed.. hope you sold near the recent high
...

Cornish Metals are back on the radar. To be clear, I don't think that much of the South Crofty mine (or the company) as a long term investment. when you have Alphamin's Biese mine or MLX's Renison as the alternatives (Cornish's United Downs project was interesting but exploration drilling fell short imo). I don't believe Cornish will provide the same long-term shareholder value as AFM or MLX, because I think they'll require a lot of funding and likely dilution of long-term holders to get South Crofty to production. But they're now back at the share price they were at when I first mentioned them in 2021. It provides a way to trade the tin price on the London market if you can't buy stocks on the TSX or ASX.

Last time I made 50% (some people here made 100%) by selling into the rise. This is a second opportunity to take advantage of any upswing in tin price and market sentiment. I wouldn't hold them too long if they do well.

TBH if you believe in the tin narrative *that* strongly (I do) and aren't limited to UK shares then I'd just buy Alphamin and be done with it, enjoying your 6-10% dividends (depending what price you bought at) as share price grows over the years. 

[Fultonius]

Thanks for the heads up Pete. After a very brief skim I converted some languishing shares that didn't have much upside or dividend yield and put them into Adriatic. Up 11% so far. (small investment, don't have much spare cash ATM). Planning to hold for 12-18mo, will keep an eye on the results and maybe get some more when I have cash of all still looks rosey.

Timely article:  https://renews.biz/86854/decarbonisation-may-cause-minerals-shortage-by-2030/  (no shit sherlock)

[petejh]

Cool cool. Watch out for the resource update this month, should be good, although this present rise is beginning to price it in.

Zinc/lead price has suffered/is suffering a bit due to weak global demand but looking through any near-term economic downturn, the future should be v.bright for Adriatic. It also has big exposure to the craziness of the silver price, hence the spike in share price earlier this year to £2.15. Should surpass that just on production later this year, but any excitement in silver will really propel it.

The good thing about the new zones being discovered in the NW is they’re higher in copper and silver content than the current resource. Lots of upside.

Yep plenty of unbiased info out there on why the energy transition isn’t going to meet the climate goals set out by the Paris agreement, all saying more or less the same thing - there isn’t enough investment of capital or human resource into the provision of the raw materials required to make it a reality. Politicians/public seem to have their heads in the sand about what’s physically required. Something’s going to give, it isn’t going to be the physical requirements of the climate targets.

[kelvin]

Adriatic is one of those I've never commited to looking at properly and am then left with that feeling of 'ach, it's too late'. I hope you all do well.
Silver definitely feels like it's going to have its days in the sun at some point soon.

Well, that was a tough first half of the year. A lot of my stuff got hammered, particularly the OFS/OSD and whilst I took profits, I left a bit too much on the table. Thank goodness for NGEX and a few others.
I finished this week up 8% so far this year and I've much less cash than I'd been carrying.

The star performer recently was WA1 Resources, on the ASX.
Bought for AU$2.60 on the 9th May, I sold for 6.41 on the 15th June. It's looks like it'll be a Tier 1 deposit of Niobium, some outstanding drill results so far and a possible future battery technology that requires Niobium but I knew nothing about it, so took my gains. The market seems to be supplied currently by Brazil and I'd be guessing at what a huge new supply in Aus could do to the commodity price.
Talking of Australia, Azure Minerals AZS is shaping up to be a world class lithium deposit just a couple of kilometres from a road and good infrastructure.
Bought in at AU$1.03 on the 19 June, it's currently trading at 1.65. It had some great results recently that the market seemingly didn't respond to - I've currently got 2% of my PF invested.
I've another couple of ASX shares that are speculative but that's all they are, no recommendation. I bought a chunk of Kingfisher mining KFM at the end of June - basically following a geologist's musing that there may be something there. After doing well on Azure and WA1, I decided to roll with it. The other one, OMA, is a gas play.

Down near Filo and NGEX, literally 5-7km away, I've built a small position in Mirasol. Assay results for the Sobek project are expected in about three weeks time and there's been steady insider buying. 2% of PF.

Hugely increased my OFS/OSV/OSD position - in total it's about 25% of my PF now. Day rates are rising. VAL is my biggest position, closely followed by Tidewater. RIG, NE, BORR and KLXE make up the rest but VAL would seem to be the cheapest here.

Stuck a bit more cash into Alphamin a while back, just in time as it's now trading at CAD1.09 and MLX, well, I quadrupled my position as it's lagging awfully due to Old Peak selling off (it looks like another huge chunk of shares was sold on Friday) and at some point, with the tin price over 28k, it has to start to catch up. Only worry with MLX is a bit of daft M&A due to sitting on a large amount of cash and a slightly 'dodgy' management. If Alphamin wasn't in the Congo, all my tin money would be there.

NGEX remains my biggest position, although the last results weren't amazing and it does feel as if things are a little priced in.
Decided to take a look at Marimaca MARI, need to do some DD but that might be one for when copper is on the up - trying to keep flexible.

Sorry it's not as detailed as Pete's stuff but currently my brain is mashed by long covid.

[kelvin]

Adriatic Metals

I'd been doing a bit of reading since the last post and then this morning the latest news release came out - so I'm in with 2% of the PF at 166p. No currency cost but a surprise of stamp duty! I don't buy many UK listed stocks.
Thanks for the push the other week.

Also up my position in Azure by 150%, it's now around 7% of the PF.

[Johnny Brown]

Not much actionable, but a great piece on mining via PDAC here: https://www.thedriftmag.com/a-good-prospect/

[petejh]

Adriatic Metals

I'd been doing a bit of reading since the last post and then this morning the latest news release came out - so I'm in with 2% of the PF at 166p. No currency cost but a surprise of stamp duty! I don't buy many UK listed stocks.
Thanks for the push the other week.

Also up my position in Azure by 150%, it's now around 7% of the PF.

Congratulations on your purchase of Europe's best near-production industrial base and precious metals project. 

MRE update still to come, due this month. Then all eyes on November for first commercial production (first ore July/August but not commercial). It's a brilliant company with lots more to come from the area.

NGEX remains my biggest position, although the last results weren't amazing and it does feel as if things are a little priced in.

The drill results from potro cliffs were good, but they came right at the end of drilling season with no more drilling ahead for a few months while the teams sit out the Andean winter. The markets love a momentum story from good news after good news. These exploration companies have a season for excitement, and a season where they've released all their drill results and they go to sleep (in terms of price) until the next season of drilling. This is when the short-term traders sell and go looking for the next thing. Time now for NGEX's price to consolidate or go into a lull, while they prepare for next season's drilling. The obvious and most likely outcome here is BHP offer to buy-out or take a % of NGEX based on the early results from potro, and Lundin Mining take a stake in Los Helados. That's on the cards and may happen in this lull before the next round of drilling. There's no doubt potro's something special, but it's an iterative process that takes many seasons. When you think that Filo sat there for 4 years with a PFS for the open pit project before they even stuck a drill in deeper and discovered the sulphides deep underneath, the rest is history.
Long-short is that potro will very very likely be a blockbuster discovery (already is), just a matter of time and patience, and NGEX have further to rise from here based on Los Helados and potro combined value. Any weakness in price is a value opportunity.


edit: MRE not PFS

[Fultonius]

Advice sought...

In my SIPP* I've got a range of funds. Some are going ok (Janus Henderson Sustainable Equity which is >50% of my portfolio is long term 5% up. Black rock sustainable offshore is 15% ish and 11.42% up.

On the downside I have various funds in emerging markets 22% of SIPP. They're doing shite. Some are currently 20% down. I originally went down this route as everyone was saying US Tech was overblown.

I'm considering a change in tack at some point, but, what are the pros and cons of:

1. Accepting some poor performers, sell off at a loss and reinvest in other better performing areas / low cost trackers (I currently have no low cost trackers, but think I should increase to around 30% of my SIPP in this.)

Or, 2. do some more research to find out if I'm just in the bottom of a poor cycle and should hold out for a rebound long term? (note: I have realised since getting a SIPP that I'm not the best/most interested in this type of research....)

Or, 3. Sell some of the better performing funds (2%ish) (take profits) and drop 2% on Adriatic.

Actually, those 3 are not exactly exclusive options 

----------------------------------------------------------------------------------------------------------------------------------


*I started my SIPP in 05/21, at the end of the "good" year, so it's been a slow market. I'm doing as well as my other pension that I've not got round to moving.

[note: I'm not seeking specific advice on those market areas / funds - that's up to me to do the research**, more about the decision making process and adjusting your plan etc.)

** but if you DO have info, feel free to share.

[petejh]

The decision-making process should partly be based on this:

You didn't knowingly invest in any under-performing assets - you invested in assets you believed would perform well.
What then about your knowledge of investing has changed since then, to make you believe that now 'changing tack' will allow you to pick a better future performer? Be honest with yourself.
If your knowledge of market sectors and your expertise at picking investments hasn't changed since then, then changing into new investments now will be no more likely to result in better performance than chance. Or at least there shouldn't be any expectation of doing any better due to skill. But if you can honestly say that your knowledge/expertise has improved since then... then back yourself and what you think you know.

Macro is impossible to call correctly. The world is full of macro experts calling it wrong.

Out of curiosity what are the ongoing charges for each of your funds?


edit - also reversion to mean. Where, compared to the 12 and 36 month moving averages, are your worst-performing funds sitting compared to best performing? And what direction are those moving averages moving in (up/down/flat)? Those are the timescales to watch for long term investments.

edit edit: Position sizing is so important. Being down on some investments in a portfolio is completely normal, I think of it in terms of planting things - some grow well, some grow slowly, some struggle to grow at all and some fail completely. All on different timescales.  You mention 65% of your portfolio is in fairly mainstream funds that are up, while 22% is in emerging markets funds (higher risk) that are down - I'd examine your position sizing of 22% higher risk emerging markets and ask yourself what are your goals there, and your knowledge of that sector, and your tolerance of paper losses.

[Rocksteady]

Good advice from Pete.

I'd also note that investment funds are usually designed to provide a positive return over 5 years. The modelling they do etc on risk and return factors in a buy and hold of this length. Especially something like emerging markets, I wouldn't be expecting those underlying company picks to be quickly turning into a big winner.

Good points would be what are the ongoing charges figures, how are they performing vs benchmarks? If they are not adding value vs a tracker and costing you a lot it might be worth thinking of switching out to something cheaper and better performing in the same sector, then you could ride the 5 year period since your original purchase into the sector in a better fund?

If it's a SIPP presumably you've got some time to wait it out until you need to access the money?

[petejh]

Advice sought...

In my SIPP* I've got a range of funds. Some are going ok (Janus Henderson Sustainable Equity which is >50% of my portfolio is long term 5% up. Black rock sustainable offshore is 15% ish and 11.42% up.

On the downside I have various funds in emerging markets 22% of SIPP. They're doing shite. Some are currently 20% down. I originally went down this route as everyone was saying US Tech was overblown.

I'm considering a change in tack at some point, but, what are the pros and cons of:

1. Accepting some poor performers, sell off at a loss and reinvest in other better performing areas / low cost trackers (I currently have no low cost trackers, but think I should increase to around 30% of my SIPP in this.)

Or, 2. do some more research to find out if I'm just in the bottom of a poor cycle and should hold out for a rebound long term? (note: I have realised since getting a SIPP that I'm not the best/most interested in this type of research....)

Or, 3. Sell some of the better performing funds (2%ish) (take profits) and drop 2% on Adriatic.

Actually, those 3 are not exactly exclusive options 

If you decide to go down the global tracker route then you definitely should have a read of Moneyvator's article on best global trackers. They refresh the article annually. Recent version just out: https://monevator.com/best-global-tracker-funds
It's always worth reading the comments section after the articles on Moneyvator as some very knowledgeable industry professionals comment there - 'Naeclue' especially is a reliably great source of knowledge.

You mention having 'various emerging markets funds'. Kowning that a typical EM fund charges a relatively high OCF, this is likely an expensive way to operate when you consider a single mainstream All-World global tracker with an annual cost of 0.4% gives you ~8% exposure to emerging markets.

Also, having multiple mainstream funds erodes your gains. The Janus sustainable fund annual cost appears to be 0.85%.
The Blackrock sustainable energy (offshore), if it's this fund, appears to be outrageously expensive - eroding any gains by 1.97% annually... Compounded over many years that adds up to a large erosion of gains and it's a high 2% hurdle every year to outperform the market.

Although that Blackrock fund has done very well over the energy crisis years when renewables are benefiting from the biggest margins. Is this sustainable (haha)? Could changes to legislation I've heard about change the margins on renewables?* Or just a return to more normal market conditions. In more normal years you're then more impacted by that 2% cost handicap.



* I know f-all, nobody gets macro correct, and this is conjecture.
** And I'm not a fund person, still don't own any (yet), so don't listen too closely to me.

 

[kelvin]

Sorry - I've no advice with regard to funds etc.

NGEX did a raise on Friday, it started out at 40 million and a few hours later was 85 million. Shares valued at 6.50 and the market liked it, finishing the day at 6.90cad. The Lundins taking everything from what I can tell, through various family funds.
Still my biggest position.


Sold Azure first thing last night, lithium futures had dropped, as had Patriot Battery Metals and there was a little noise about the land from indigenous sources. Happily out with a 27% profit, I do think it's highly likely to rise but the risk over the weekend was too much for me. It dropped 10% or so after, so I obviously wasn't the only one to think like that.

One I haven't mentioned is London listed Thor Explorations, a gold producer in Nigeria. Recent results were better than expected. The CEO owns around 20% of the company and last bought shares in June.
However they've acquired some lithium tenements in SW Nigeria and started drilling recently. Visual results in the cores and assays pending in August, they also have a second rig on site now.
Lots of things to consider from geology to logistics, and Nigeria might not be the safest place to invest currently but if the assays return positive results, further explanation can be funded by profits from the gold mine. Very early days
No recommendation obviously. Entertainment purposes only 😜

I've bought between 19-21p and 4% of my PF.

[petejh]

Bonus idea for anyone into higher-risk speculation (I'm not taking part).

Cornish Metals finally reported this morning on the remaining holes for United Downs. Short version - the grades and widths are not good enough to economically mine the lode they've drilled.  Share price reacting accordingly. Happy now that I sold 50% around the recent high and took profits. If you were in it for a short-term win, then that day has now passed.. hope you sold near the recent high
...

Cornish Metals are back on the radar. To be clear, I don't think that much of the South Crofty mine (or the company) as a long term investment. ...
I don't believe Cornish will provide the same long-term shareholder value as AFM or MLX, because I think they'll require a lot of funding and likely dilution of long-term holders to get South Crofty to production. But they're now back at the share price they were at when I first mentioned them in 2021. It provides a way to trade the tin price on the London market if you can't buy stocks on the TSX or ASX.

Last time I made 50% (some people here made 100%) by selling into the rise. This is a second opportunity to take advantage of any upswing in tin price and market sentiment. I wouldn't hold them too long if they do well.

TBH if you believe in the tin narrative *that* strongly (I do) and aren't limited to UK shares then I'd just buy Alphamin and be done with it, enjoying your 6-10% dividends (depending what price you bought at) as share price grows over the years.

Hope someone benefitted from this, Cornish +50% from this date. It's now sitting at the 200 day moving average, with resistance above. I'd be surprised if they broke higher. Not impossible if tin price had a bender in September on Myanmar worries, but a good spot to be taking profits here. To visualise: (200day solid blue, my drawn resistance lines dotted blue, circle date posted)




Zoomed out:

Adriatic Metals. I ended up selling that trade for a quick 10% gain. I've repurchased them for the third time earlier this year at around £1.65 - 70 for 1.5% of my portfolio.
Join the dots here. The NPV of Ruprice when it goes into production in November of this year will be close to $1bn. This valuation is based on the now out-of-date resource estimate and the DFS (definitive feasibility study) from 2 years ago.

In my opinion this is a screaming growth & value share at current price - on a par with Alphamin below 60c.

Adriatic have done well since, currently +23% from this date. There's much more to come for the patient investor.

Below are tea-leaves bullshittery mostly drawn earlier this year, zoomed in and zoomed out. Second circle is date posted on ukb. It shows various thingies*, which have no basis, and which shouldn't happen. I'm unsure if the second 'bull flag' is valid, will see how it plays out. If it is a valid bull flag then my target for November based on bull-flags repeating their % gains would be around 215 (horizonatal blue line). First bull flag repeated its gains - 1st circle.

Will revisit this in November to see how wrong I got it. Downside risk is bottom of the trident (diagonal colourful thingy) - very low probability versus upside (imo).

* (trident swing pattern, fib retracement levels, a few different candle patterns)

zoomed in


zoomed out





Most other stuff boring through summer holidays drift, except Filo and PMET looking good value again. PMET looking especially good value for the patient, appears to being messed around with by short-term speculators, volatile, but the fundamentals of a huge tonnage high-grade asset are in place and the deposit size is only going to grow from here. It's the lithium investment I'd make if I didn't already own a large position from $7. Not a sector for the anxious investor though.

[stone]

Advice sought...

In my SIPP* I've got a range of funds. Some are going ok (Janus Henderson Sustainable Equity which is >50% of my portfolio is long term 5% up. Black rock sustainable offshore is 15% ish and 11.42% up.

On the downside I have various funds in emerging markets 22% of SIPP. They're doing shite. Some are currently 20% down. I originally went down this route as everyone was saying US Tech was overblown.

I'm considering a change in tack at some point, but, what are the pros and cons of:

1. Accepting some poor performers, sell off at a loss and reinvest in other better performing areas / low cost trackers (I currently have no low cost trackers, but think I should increase to around 30% of my SIPP in this.)

Or, 2. do some more research to find out if I'm just in the bottom of a poor cycle and should hold out for a rebound long term? (note: I have realised since getting a SIPP that I'm not the best/most interested in this type of research....)

Or, 3. Sell some of the better performing funds (2%ish) (take profits) and drop 2% on Adriatic.

Actually, those 3 are not exactly exclusive options 

----------------------------------------------------------------------------------------------------------------------------------


*I started my SIPP in 05/21, at the end of the "good" year, so it's been a slow market. I'm doing as well as my other pension that I've not got round to moving.

[note: I'm not seeking specific advice on those market areas / funds - that's up to me to do the research**, more about the decision making process and adjusting your plan etc.)

** but if you DO have info, feel free to share.

One approach is to keep fixed ratios of a few holdings matched so as to be ok overall irrespective of how the future pans out. Doing that swerves the effort/angst of trying to constantly pick and choose etc.
I thought this website gave a handy view of that outlook https://portfoliocharts.com/portfolios/
 

[petejh]

The drill results from potro cliffs were good, but they came right at the end of drilling season with no more drilling ahead for a few months while the teams sit out the Andean winter. The markets love a momentum story from good news after good news. These exploration companies have a season for excitement, and a season where they've released all their drill results and they go to sleep (in terms of price) until the next season of drilling. This is when the short-term traders sell and go looking for the next thing. Time now for NGEX's price to consolidate or go into a lull, while they prepare for next season's drilling. The obvious and most likely outcome here is BHP offer to buy-out or take a % of NGEX based on the early results from potro, and Lundin Mining take a stake in Los Helados. That's on the cards and may happen in this lull before the next round of drilling. There's no doubt potro's something special, but it's an iterative process that takes many seasons. When you think that Filo sat there for 4 years with a PFS for the open pit project before they even stuck a drill in deeper and discovered the sulphides deep underneath, the rest is history.
Long-short is that potro will very very likely be a blockbuster discovery (already is), just a matter of time and patience, and NGEX have further to rise from here based on Los Helados and potro combined value. Any weakness in price is a value opportunity.


edit: MRE not PFS

Time for NGEX to start waking up post the Andean winter. That was the lull. If the world isn't burning by January I think this will be at a significantly higher market cap.
https://www.newswire.ca/news-releases/ngex-kicks-off-new-drill-season-at-lunahuasi-891440155.html

[kelvin]

The October '23 Presentation from NGex is presented so clearly, it's obvious where this thing is headed.
Well worth checking out for those who are interested.

https://ngexminerals.com/investors/presentations-and-videos/presentations/

[Rocksteady]

The October '23 Presentation from NGex is presented so clearly, it's obvious where this thing is headed.
Well worth checking out for those who are interested.

https://ngexminerals.com/investors/presentations-and-videos/presentations/

Good to see this. I got in at 6.87 and have been losing money most of the time ever since. Saw it in my head as a five-year punt tbh so haven't been too worried about it. Would be nice to see some growth in the shorter term.

[kelvin]

Good to see this. I got in at 6.87 and have been losing money most of the time ever since. Saw it in my head as a five-year punt tbh so haven't been too worried about it. Would be nice to see some growth in the shorter term.

I lost money on Filo for a while but eventually doubled my money. I entered just as summer started and it went down until Nov.
 As Pete said, we're entering a time when there should be plenty of news catalysts in the short term.

[petejh]

The October '23 Presentation from NGex is presented so clearly, it's obvious where this thing is headed.
Well worth checking out for those who are interested.

https://ngexminerals.com/investors/presentations-and-videos/presentations/

Good to see this. I got in at 6.87 and have been losing money most of the time ever since. Saw it in my head as a five-year punt tbh so haven't been too worried about it. Would be nice to see some growth in the shorter term.

The market for junior explorers on the TSX.v, London AIM and (lesser extent) ASX is a wild west, with extreme price volatility, populated by legitimate-sounding pumpers and executives who in reality are bullshitters eager to fleece you out of your money to fund their next lakeside property; operating within a framework of opaque corporate governance; where non-profitable pre-production 'exploration companies' without a legitimate economic resource remain afloat via endless capital raises - often involving share options/warrants that dilute value even further. When it falls apart the bullshitters re-emerge in new entities.
I don't mention companies within this sector on a UKB investing thread lightly. I've spent my time being burnt in this sector and learnt the hard lessons. That said there are never any guarantees, e.g. Switzerland's oldest and 2nd largest bank just went broke. 

NGEX and Filo are blue-chip. NGEX's share price is underwritten by 1. Los Heldos resource value and 2. world-class discovery at Potro Cliffs (aka Lunahuasi). That doesn't mean there won't be volatility, there could be extreme volatility, especially in this current market with all that's playing out. There's a saying that volatility is your friend if you own quality companies because it works in both directions, the key is knowing quality versus crap. Over the longer term these two are blue chip assets in a growth market if you believe the demand for copper will grow over the next ten years. However if you believe the world is heading into an abyss where all major countries cease economic progress for decades to come and therefore demand for copper shrinks, then obviously these two companies with giant Andean discoveries aren't a wise investment.

For Filo the underwriting was the 5%, $80m investment by BHP at $16 per share - which was a premium to market price at the time - with no warrants. It's virtually unheard of for a junior explorer to raise capital at a premium to market price and with no warrants.
Then a further investment by BHP, along with Lundin family trusts and large institutions, in a $100m raise this year at $21.20 share price. Again no warrants, minimal dilution, raised at virtually market price. Filo is a banker. If you don't desperately need the cash you just watch and wait and ignore fearful noise, any weakness below $20 is a value opportunity. The quality and size of what Filo discovered makes it (almost) unique. At Potro Cliffs NGEX appear to have something comparable in size/quality to Filo.

For NGEX, the 2023 raise for $85m at a share price of $6.50 was a similar story to Filo's raises - oversubscribed, minimal dilution and no warrants. Lundin family trusts were the major backers, plus some institutions. Lundin insiders have also put millions of their own cash buying NGEX on market this year. It provides support to share price and validation (if you don't understand drill assay results) that the Potro is something very special indeed. The capital raised pays the costs for the next 12-18 months of drilling out the Potro discovery. The Potro story may play out along similar lines to Filo, where there will be further investment by either Lundin Mining or BHP; or perhaps the Lundins will want some competitive tension from bringing in a different suitor. Doesn't really matter who, NGEX have another giant discovery on their hands here, which they control 100%.

NGEX also have Los Helados back-stopping their share price. LH is a massive copper resource that has gone through the stages from discovery in 2006 to resource estimate and technical report in 2019. The company just announced this week that an updated technical report will be out next year - based on previous events, this suggests there's a path towards sale to Lundin Mining, who have just bought Casserones mine and processing plant next door to LH, negating the need to build expensive plant at LH.

The ore from Potro Cliffs will likely eventually end up going to Josemaria - another Lundin Mining project about to enter the construction phase.

Or.. NGEX are the masters of the spinout company - their geo team find something special, NGEX drills it out to develop understanding of what they have, they produce a technical report, and then they spin it out to form a separate commercial entity. They did this with Filo, and with Los Heldos when it was spun-out to form the separate 'NGEX Minerals'; the original NGEX subsequently changed its name to Josemaria. Josemaria was subsequently then purchased by Lundin Mining last year. So it's possible either Potro or Los Helados will be spun-out (for 2nd time in LH's case). In this scenario NGEX shareholders retain ownership of shares in the new spinco.

It's a bit of a web but one that makes sense.

This type of corporate structure would keep things clean between Argentina and Chile jurisdictions: Los Helados & Casserones (Chile), Potro Cliffs & Josemaria (Argentina).

Filo (90% located in Argentna) also benefits from Josemaria project being in its neighborhood. Although Filo is so gigantic it may end up with its own plant. Some sort of JV or toll-treatment agreement is my guess between Filo/BHP/Lundin Mining for an expansion of Josemaria's processing plant to treat future Filo ore. 

All this will play out over the next few years. Josemaria scheduled to commence production 2026, construction needs to commence next year.

A more important sentiment factor in the immediate near-term for Lundin Group companies with exposure to Argentina (NGEX, Filo and Lundin Mining) is the Argentinian general election taking place this Sunday. I believe this is causing the market uncertainty around these projects. Argentina's economy and currency hugely basket-case but the country is trying to develop its resources and sits on huge future wealth. Following the election, the new Argentinian gov will need begin making commitments about fiscal policies for foreign investment. This is needed to provide long-term clarity for foreign mining companies wondering whether to invest in major projects within Argentina - it's essential that major non-Argentinian investors are reassured that long-term profits from mining projects such as Filo, Potro and Josemaria can be taken out of Argentina in dollars. No large western company will deem it worth investing to build these mines if they have to keep too much of their profits in-country in devaluing Argentinian Pesos. This is the 'fiscal stability agreement' that was talked about two years ago when Filo hit the headlines, but which has still not yet been settled. Sunday's election will be a step closer to settling this question.

A curveball downside scenario is that Argentina have received an invitation to join the loose-knit BRICS group (announced this summer at the end of the BRICS summit), if it agrees it would become a full BRICS member in 2024. Very uncertain, could go either way and Argentina is in a 'man in the middle' position. Say the government decides to join, introduces fiscal policies that make the country even less attractive for western investors but easier for Chinese belt/road, as a result Lundin group companies market-cap tank, and China comes in and buys all these major resource projects on the cheap. Bye-bye shareholder value in Filo/Potro/Josemaria (but not LH/Casserones). That's worst-case. Some sort of competitive middle-ground tension between west-east possible imo.

That's my view, helps me to clarify my thoughts by writing this.


sources:
brics invitation  https://blogs.lse.ac.uk/cff/2023/08/29/odd-one-out-argentina-in-brics/
election/state of economy  https://www.reuters.com/world/americas/argentina-braces-election-with-economy-intensive-care-2023-10-19/
Argentinian fiscal agreement/investment landscape  https://news.metal.com/newscontent/102207849/argentina-aims-to-become-one-of-the-worlds-top-ten-copper-producers-by-2030-its-investor-friendly-stance-has-attracted-global-players-such-as-glencore-and-lundin-mining/
+
https://www.bnamericas.com/en/news/bhp-reveals-interest-in-investing-in-argentina
spinout of Josemaria   https://www.newswire.ca/news-releases/ngex-resources-inc-announces-closing-of-the-spin-out-of-the-los-helados-property-name-change-to-josemaria-resources-inc-and-new-board-806663807.html
insider buying  https://ceo.ca/@jameskwantes/sunshine-insider-buying

[petejh]

Below are tea-leaves bullshittery mostly drawn earlier this year, zoomed in and zoomed out. Second circle is date posted on ukb. It shows various thingies*, which have no basis, and which shouldn't happen. I'm unsure if the second 'bull flag' is valid, will see how it plays out. If it is a valid bull flag then my target for November based on bull-flags repeating their % gains would be around 215 (horizonatal blue line). First bull flag repeated its gains - 1st circle.

Will revisit this in November to see how wrong I got it. Downside risk is bottom of the trident (diagonal colourful thingy) - very low probability versus upside (imo).

* (trident swing pattern, fib retracement levels, a few different candle patterns)

zoomed in


zoomed out

The potential 'bull-flag' on the chart wasn't. It's November, and Adriatic should have started production by now and have turned into a cash cow. Except they haven't. First production has been delayed to early January due to:
1. delay by the national electricity operator connecting Adriatic's processing plant to the Bosnian national grid.
2. delay in contractor delivering some re-agents.

Not a biggie and hardly any mining projects hit the targets for first production, Adriatic were looking a bit too perfect there so no great surprise that it couldn't last. Patience an essential attribute for this sector.

All eyes now on January. Between now and then there's another update to the resource estimate,  encompassing the completion of this year's drilling of the NW extension to Ruprice. This is expected to give a significant increase in resource over that used for the 2021 feasibility study.  Life of mine for the 2021 study is 10 years - the resource is now heading towards a 20 years life of mine, which is yet to be priced in.

Below's my valuation, based on published earnings estimates of $220m per year over the first 5 years following January 2024 start-up (Cannacord Genuity and Sprott, company estimate is for a higher rate):

Fundamentals.

Current market cap: £486m

............

Debt: £114m
Cash: £35m
Net debt: £79m

Enterprise Value (EV): £565m

.............

Average annual EBITDA over first 5 years of production: £200m

.............

EV / EBITDA ratio: 2.8
Typical ratio for peer silver/base metals producers: 4 - 6


An alternative quick rule-of-thumb valuation is to look at the estimated NPV for Ruprice:
NPV = ~$950m (based on the 2021 study). GBP £750m.
Adriatic is currently priced @ 0.79 x NPV, a typical ratio for a developer pre-production, although now very close now to the start line.

A re-rate to 1 x NPV should be expected upon production, assuming an incident free start and ramp-up to production rates by mid-2024 as per the assumptions in the feasibility study. If it wasn't Bosnia I think the re-rate to 1x would have already begun.

This $950m NPV doesn't price in any extension to the 10 year life of mine. So nothing for the expansion of the resource in the NW extension already announced, with further NW resource expansion due to be announced in Jan. There are also areas surrounding Ruprice to the west being drilled, with some positive language used. Finally something that would blow the roof is Adriatic being granted an exploration permit for the area of land adjacent to the north-west boundary of Ruprice. The mineralisation doesn't stop at the current permit boundary.

Finally, all assumptions are for a spot price of $24/oz silver equivalent. Any upside to that is leverage to the profit margin. Adriatic's all-in sustaining cost of production is an industry leading @ $7/oz silver eq.


Technically.
Price is suggesting formation of an inverse H+S pattern, clearly seen on the weekly timeframe in chart below. Similar to the inverse H+S in July 2022.
It's dependant on the 'right shoulder' confirming by price increasing fairly soon from here. If it does, then the dotted line marked 'neckline' is the price level / timeline to watch for a breakout higher.

£2.15 still my initial target on start of production, higher than that into the meat of next year if they have a smooth start and ramp-up. Longer term I'm very bullish on Adriatic turning Ruprice into a world class 20+ year asset and developing further assets / M&A of other development assets using cash-flow from Ruprice.

Downside? It's Bosnia. Market doesn't trust that there won't be political instability. Kosovo tensions earlier this year for e.g. Also, this is the first major mining project in the region for decades, it's an untested jurisdiction. Hence ADT is currently still so cheap this close to the start line. That said, Ruprice at current estimated output will contribute 2.5% of Bosnia's GDP and the government seem very pro. Adriatic is 4% of my portfolio, I'll be increasing that to 6% on Monday.

[petejh]

First production has been delayed to early January due to:
1. delay by the national electricity operator connecting Adriatic's processing plant to the Bosnian national grid.
2. delay in contractor delivering some re-agents.

Not a biggie and hardly any mining projects hit the targets for first production, Adriatic were looking a bit too perfect there so no great surprise that it couldn't last. Patience an essential attribute for this sector.

All eyes now on January.

Grid connection to the processing plant is now complete. Re-agents reported to be arriving on 23rd Dec.

Also the rail line from the railhead at Vares to Sarajevo opened last month and the first train has run. 

Between now and then there's another update to the resource estimate,  encompassing the completion of this year's drilling of the NW extension to Ruprice. This is expected to give a significant increase in resource over that used for the 2021 feasibility study.  Life of mine for the 2021 study is 10 years - the resource is now heading towards a 20 years life of mine, which is yet to be priced in.

Reserve not resource - i.e. the ore with certainty of economic extraction.

Updated reserve estimate released this morning. Confirming an increase to 18 years life of mine (up from 10 years in the previous reserve released July 2021). Huge. Will also without any doubt grow further over the coming years. Grade is down ~10% on the previous reserve.

Along with the 89% increase in reserve tonnage, a crucial piece of information in the updated reserve estimate document is this:
High-grade ore with a BWi range of 6-7 kWh/t will be treated in the early years. Adriatic and Ausenco have used
a maximum feed rate of 130 tph in the LOM production schedule resulting in throughputs greater than 1.0 Mtpa from Year 6 to Year 10 and greater than the nominal design of 0.8 Mtpa for all years from Year 4 to Year 15.
Adriatic and Ausenco are confident that the 30% increase above the nominal throughput capacity in early years
will be achieved due to the preferential treatment of soft, high-grade ore in early years of the Vares Project, and
state that the throughput capacity – ore hardness relationship will be confirmed by modelling. AMC concurs with
this assessment.

Important, because this compares to the cash-flow estimates based on estimated output of ~750k tons per annum used in the feasibility study. Increased early years output, increased life of mine = large re-rate from current market cap.

Another resource update is due in H1 next year, encompassing drilling completed since July 2023.

Technically.
Price is suggesting formation of an inverse H+S pattern, clearly seen on the weekly timeframe in chart below. Similar to the inverse H+S in July 2022.
It's dependant on the 'right shoulder' confirming by price increasing fairly soon from here. If it does, then the dotted line marked 'neckline' is the price level / timeline to watch for a breakout higher.

Inverse H+S confirmed. The 'right shoulder' formed lower than I expected with the 2-day spike down on Tues and Weds last week (incidentally Weds was the day capital flowed into the US 'metals and miners' ETF as it broke out on FED signalling of rates softening). I'd assumed that the right shoulder had formed already, as per the chart in previous post.
See below charts on the weekly timescale (my assumed shoulder circled) and daily zoomed in. That 2 day spike down is a pretty blatant example of the market 'searching for liquidity' before a move higher - triggering people's stop-losses, people wavering and selling. 

My expectation is for some resistance at the dotted 'neckline' around £1.82, then initial breakout to previous high around £2.15. I remain of the opinion that Adriatic is a strong long-term hold and deeply undervalued.

weekly


daily zoomed in on spike

[Fultonius]

Filo on a rip ATM. @22 CAD
I rebought @ 21 CAD in august in my pension as I had cashed in some other stuff - that slumped, but I increased  my stake at 17.5CAD. Overall now sitting at 12.14% gain this time around (no more 100% gains this time ;-)

Planning to sit on it for a while.

Should really reply to your reply to my previous big brain dump - just not had the time!

[petejh]

Filo and NGEX will forever be no-brainer buys imo any time they dip to $20 or $6.50 respectively. We're now back into Andes drilling reporting season (since Nov) so can expect sp movement in anticipation. NGEX - much anticipation currently being priced in on next Potro (Lunahuasi if you must) drill results - due early Jan.
For both NGEX and Filo I expect some sort of corporate M&A or spin-out news next year (likely involving Lundin Mining, or perhaps a.n.other).

[petejh]

My expectation is for some resistance at the dotted 'neckline' around £1.82, then initial breakout to previous high around £2.15. I remain of the opinion that Adriatic is a strong long-term hold and deeply undervalued.

weekly


daily zoomed in on spike

Da-da...

That's the short-term target hit.




Price hung around for all of 1 day at the resistance line. Then gapped up through that neckline yesterday. It's all tealeaves bollocks.

Trading volume last week was joint highest since company listed. One day last week was highest daily volume since listing.

As production begins and ramps up this will v.likely continue to re-rate over the course of 2024, to somewhere in the low £3's is my best estimate right now (based on valuation and chart), so around 50% upside from here. That's barring calamities which could still happen either in-mine, or in-country, or globally (so don't bet the farm). My EBITDA ratio valuation in a previous post guides the way. I think it's conservative, and doesn't factor the updated reserve released last week, nor the Serbian asset to be announced next year, nor a possible permit extension to the north-west of Ruprice, nor the proposed increase in mill output to 1mtpa (from 750ktpa). I won't be buying any more as I filled up at £1.60-£1.75 for 6% of my pf. I usually don't chase things once they start to re-rate.

Don't know what shape the price will take next, whether steady re-rate or unsustainable rocket ships. It might pull-back from this level or go on a bender, xmas trading can be weird in thin volume.
The diagonal shaded area on the chart (a 'trident' based on some significant swing highs and swing lows which marked the low point of the 'orphan period' of a Lassonde curve during the mine development phase) will stop being valid at some point but has been a useful structure to date. Price reacted off it high and low (circled).

I'll probably stop blathering on about ADT1 soon as there's good opportunities coming up in other companies in my pf - Alphamin one that's soon likely about to take a similar re-rate journey as it begins production from Mpana South in Feb.

Weekly views: