I commented on financings two weeks ago. I went through the four-month hold period and how that often impacts share prices. And I described two kinds of financing opportunities that I’m interested in right now.
But that was not a complete list. So let me expand on it with two additional kinds of opportunities.
Very Cheap Explorers
Lots of explorers have been waiting for a stronger market to finance. Some have waited by choice, not wanting to dilute too much by raising at a low share price; others have waited because they wouldn’t have been able to find enough interested investors.
As the gold market heats up, these teams will start passing the hat. There will be a lot of opportunities to invest in cheap explore-co’s.
Some make sense. Others do not. Here’s a basic checklist of what to watch:
Teams financing right now are more likely to have at least some of these qualities than the flood of companies that I think will finance in September. September is a very popular month for financing and this year I think it will be especially so because the bull market will be established by then.
The beginning of a bull market will mean a lot of financings. There will be some good opportunities in the mix, but there will be a lot of crappy companies looking for capital.
The group of companies that need money covers a wide swath, from totally inactive and debt-ridden shells to active clean companies with clear targets that are ready for the chance to create value for shareholders. So if you’re considering investing in a financing, make sure the opportunity is much more than just ‘cheap’.
Leaders in the exploration space use bear markets to create the vehicles they ride to success when the bear turns bull. Many such deals have debuted over the last few years; I would put Great Bear, Integra Resources, Troilus Gold, GT Gold, and Quebec Precious Metals in that list.
But there are more in the works. Some teams weren’t yet ready when the market started to turn in 2016; some teams weren’t convinced the bull had really arrived and so stayed private until now.
There are two such debuts raising money right now that I am about to detail for Premium subscribers. Two others could follow soon after.
New deals are a bit tricky, as it’s hard to know with confidence how the market will value the company. On the flip side, new deals from strong teams often debut with a splash and attract outsize attention. Forced to identify the key requirement, I would say People: the deal has to come from a group with the experience, network, and capital to have secured good projects, to access capital, and to create market momentum.
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.
I am very happy with your news letter and enjoy seeing you speak when we get the chance. We have bought stocks that you have recommended and your record of success is much better than any other recommendations out there.
BTW - I really enjoy reading your newsletter - very comprehensive and you do an excellent job of integrating a macro perspective into your analysis.