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Intensity & Opportunity

I started Resource Maven five and a half years ago. Big picture, I became a metals and mining newsletter writer because I had developed a substantial body of knowledge, a large network of contacts, an understanding of valuation, an appreciation for the share price impacts of marketing and structure and clarity of purpose, and a keen interest in this sector that brings science, economics, and social politics tightly together. Since I love communicating, it made sense to start a service sharing my insights with interested investors.

Of course, I also started my newsletter business because I wanted to make money investing in this market that I had come to know so well. That part was a bit of a gamble.

The business idea started to come together in mid-2014. I don’t need to remind any of you what the mining markets were like then – terrible.

Of course we all knew it had to turn around at some point – that’s how cycles work – but there was no way to know when that would happen. And to start my business I had to quit my salaried, pensioned job, take out business loans, and be prepared to earn very little until the market turned. Scary idea.

But (there’s always a ‘but’) it was also essential to get out ahead of that turn, so that my personal portfolio and the Maven portfolio were ready when it happened.

So I quit my job in August 2014 and started Resource Maven. And while those first 16 months of still-bear market were hard, I’ve never looked back.

This job is such a privilege. I get to spend my days searching for value and, when I find it, sharing it with others. I get to sit down with management teams of all scales, from tiny juniors to major miners, and ask them anything and everything. My knowledge has grown in leaps and bounds and my network gets stronger every day.

And the gamble worked. When the market turned in early 2016 the Maven portfolio was ready and subscribers made money. In the sideways markets of 2017 to 2019 I found best-of-the-best stocks that performed.

Of course some bets went sour along the way. And things came out of left field to disrupt my plans, from COVID to an Everything Bubble stock market. But those things improved my risk management strategies and required me to continually up my macroeconomic game.

I’m looking back on all of this today because it is the path that’s positioned me to navigate the intense gold bull market we are now in.

And it’s intense.

There are so many kinds of opportunities to assess right now. In the last week, for instance, I’ve met with six companies. They are all pretty different, ranging from a small junior with a million ounces of road-accessible gold in Yukon that could well grow notably this year to a re-structured Mexican explorer that could soon be funding exploration on its interesting project by sending old stockpiled material through a local mill and clearing half a million dollars a month to a developer peripherally involved in a hostile M&A battle that is inarguably undervalued despite a top-notch exec team and a large, almost-build-ready project to...you get the idea.

The intensity isn’t in taking all these meetings and trying to understand all these stories. That’s my job and I’m used to it. The new intensity is that almost every stock is already moving, so if I think the opportunity makes sense there is very real pressure to act on it ASAP.

Of course, within that pressure a million factors always lie. Is the company financing? Has gold just run, eased, or gone sideways? What news happened or is pending? Has the stock already established momentum? Geologically, do I understand the story or do I need to reach out to a geo friend for comment? On and on it goes.

One of the craziest parts of a bull market is that it gets harder to make bad decisions.

I think all three of the stocks I outlined briefly above will work in this market. I really do. They all have the things that companies need to offer to succeed in a gold bull market:

 Clear plan for what they will do in the next 3, 6, and 12 months to create new value for shareholders, with timelines, expectations, funding, risks, and alternatives all detailed

 Access to capital

 Project with potential

 Good share structure

 Good at communicating the story and opportunity

This list is way shorter than my list of sideways-market requirements. Then I also needed top jurisdiction, project with true scale potential, clear potential for a takeout or strategic investment, and absolute top tier targets for explorers and top notch economics for developers.

I’ve talked about this already – how, in a bull market, you can expand your list from the Best of the Best to also include the Best of the Rest.

For the Maven portfolio, though, that introduces a dilemma. How many stocks can or should I really cover?

Were I to buy into and write up the three stocks I noted above, the portfolio would hit 49 stocks. When I started the Letter I said I wouldn’t let it get above 30.

I think the answer is balance. I believe subscribers want and should get a range of ideas, because everyone has preferences. Some like early exploration while some like more advanced projects. Some like royalty companies while others just want focused explorers. Some really like silver or want to see opportunities in uranium or palladium.

To supply all those needs the Maven portfolio has to be bigger than any one person’s portfolio is likely to be. But even though we are moving into a market where, in not too long, just having the word “Gold” in a company name will boost the price, I still do not plan to buy into or recommend every stock that I think will work.

Because in a bull market, almost everything works to some extent.

My goal is still to pick those that will work the best. With that in mind – the undervalued developer will be the Buy in the upcoming issue of Maven Metals while the two explorers…I haven’t decided what to do with them quite yet!

The other intense aspect of this market is financings. They are going crazy. I’ve sent three financing opportunities to Premium subscribers in the last week.

Since my goal with Resource Maven is to help investors understand and profit from investing in the metals and mining space, let me talk about Premium for a moment.

Premium is a service for those who like to invest in private placements. I would estimate that I fill half of my portfolio via private placements and half through market purchases. Why financings? Because financings offer the following advantages:

 Warrants – many financings include a warrant or half warrant with each share. Warrants give you the right to buy stock down the road at a set price. If the stock does well, they let you increase your position at an earlier, lower price.

 Scale – buying in a financing is a great way to establish a good-sized position without influencing the share price. Trying to buy 50,000 shares of a thinly traded stock in the market often drives the price up, but one can buy large positions in a financing with no effect.

 Private, new, and restructuring companies – the only way to get a position in a private company is through a financing. When private companies go public they complete a concurrent financing (the Initial Public Offering or IPO raise); those financings are the way to establish a solid position at a known cost base in a new company, which is desirable when the new co is likely to run up immediately. Companies that are restructuring – anything from a merger to a rollback and new management – often run a concurrent financing; such opportunities can be like getting into a new company at a nice low price before the market realizes what is going on.

The disadvantages include:

 Hold period – shares bought in a financing are usually restricted from trading for four months. If the stock runs or tanks during that time, financing investors can’t take advantage or ditch out. Then, at the end of the hold period, a slew of shares at the same cost base come free trading on the same day. The usual result: a stock that gained moderately during the 4-month hold 4 period will trade back down to or near the financing price when the hold comes off as financing investors take profits.

This effect is exaggerated when the financing included warrants, as investors will sell for even a small profit and then just hold the warrant as their way to get exposure should the story work

As this gold bull market gets going, you want to position in as many good gold stocks as possible. Buying through financings that include warrants means you not only get your position but you get the right to buy more stock later at a set price (often years later) if the company does well.

The private/new/restructuring companies angle is also important. I don’t buy a lot of private companies because I like to be able to sell, but the ‘new company’ angle has been in play a lot lately (Premium subscribers got the chance to invest in the Reyna IPO financing, for instance). There have been a lot of restructures lately as well that Premium subscribers have had the chance to buy. Auramex Resources (TSXV: AUX) is an opportunity I sent out just last night; the company is rolling back its share count, adding a new asset, and bringing new people (with access to capital) on board. The concurrent financing is way oversubscribed, which suggests the stock will perform when the deal-related trading halt is lifted and the exploration season approaches.

In general, for new deals or restructures like this that I think the market is really going to like I want to get in at the financing price, rather than fighting for stock in the market once it starts trading.

If this investing approach appeals, feel free to send me whatever questions you might have. I will here answer a few common ones.

Investment amounts: you do not need to be putting 5 or 6-figure sums into these financings. You can, but if you play with smaller amounts that is just fine as well. In general Premium subscribers invest anywhere from $4000 to $150,000 in individual financings. (Some financings have minimum investment amounts, but this is not common and when it happens I try to establish a work around if possible.)

o The purpose of Premium is to give engaged retail investors access to financing opportunities they otherwise would not know are happening, understand the value in, or be able to get into lacking a connection or a pile of capital. As such I even encourage smaller investors to participate, if it makes sense for them; I started small as well.

Number of opportunities: this has varied widely over the three years I have run Premium because companies finance when the conditions are right and don’t when they aren’t. As such financings often ebb and flow. Right now, it’s a flood; I’ve sent something like 5 opportunities in the last month.

Do I need to be accredited? Yes. I don’t ask or check, as it’s not my place to ask about your financial status, but in almost every case investors have to be accredited to participate in private placements.

How does it work? When I find a financing that I like, I secure a large enough allocation to accommodate Premium subscribers (I have to estimate how much we will want as a group). When I have that secured, I write up the opportunity in a note, just like how I write up a new Maven Buys stock idea. I send the note to Premium subscribers, who then get 48 hours to consider. Those who want to participate reply, letting me know how much they would like to buy. I tally up orders, cutting people back pro rata if demand goes beyond my allocation, and then send each subscriber a confirmation of his/her allocation with the subscription document, company contact person, and timeline for submitting. From there it’s up to each investor to submit the form (direct to the company or through his/her broker) and move the money.

Does Resource Maven make money from the amount raised? No. This is very important. I do not take fees on capital raised, as that would incentivize me to encourage people to invest in financings for the fees. That is not the motivation or method. Premium subscribers pay a premium subscription fee and those fees are the only way in which I make money from these financings. Aside, of course, from the investments themselves performing in my portfolio!

I haven’t discussed Premium in the Letter for some time because you all read this for stock information and ideas, not to be pitched on upgrading your subscription. But I am spending just as much time assessing financing opportunities as market opportunities these days and in several recent situations the financing entry points have been considerably better.

So since, big picture, I think you all read this for guidance on how to invest in the junior mining space, I wanted to ensure you all understand the Premium service and to open the door to whatever questions you might have.

Newsletter

In her letter, Resource Maven explains what she is buying and selling, and why. Maven has bought into several of the markets best - performing stocks well ahead of the curve. She regularly identifies exciting new exploration opportunities and manages the inherent risk by selling some into speculative gains. And the mine builder and operator stocks that form the basis of the portfolio give strong, ongoing leverage to the rising prices of gold and silver. She has your precious metal bases covered.

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As a recent subscriber to your newsletter, I wanted to say thank you for all the amazing information and detailed analysis regarding the many companies you're invested in. I cannot begin to imagine how much time you put into your work. I am very new to investing in the mining sector and did quite a bit of research before selecting your newsletter over the many others available. I was nervous about signing up to anyone's newsletter as there is so much negativity on the internet about newsletter writers (e.g. pump and dumpers). Anyways, I'm feeling good about being aligned with you.

-GM (August 2019)

Thank you for the update. I am actually quite glad that you are flexible with your letters to enable you to get your readers the best information. And, I appreciate your offer to join the premium newsletter. I hope to continue to build my portfolio, with the help of your newsletter, to the point where I am able to take advantage of your offer and join the pp world in the not too distant future. I have really enjoyed your newsletter, read it with interest and have aligned my commodity portfolio with your recommendations, which has worked out very well. You are clearly a very trustworthy person, which is not always commone in the world of commodity investing. Thank yo for doing what you do so the small retail investor/speculator like me can have a better chance at success.

-RR (September 2019)