The following is a synopsis of some of my concentrated investment ideas. These ideas were high conviction, publicly shared, with the majority of them taking place during the toughest of Gold markets. These ideas are not intended to portray that I have not had any losses – I have. However, with my risk management framework and ability to cut losses if my thesis does not pan out, they have been immaterial to the overall investment portfolio. These losses on the positive side have helped refine and improve the due diligence approach, which is a continuous improvement process.
$CLGRF | Claude Resources | Acquired | Profiled this publicly during 2014 (before I had a wide following). Leading up to 2014, the company was struggling financially. I had taken a bath with this position. In fact, at one point I was down over 75% from my initial purchase price. I did everything you’re taught not to do. Bag hold it. Financial data was getting worse. They began selling assets, including Madsen, at fire sale prices. In 2011, Claude discovered the Santoy Gap and L62 just a few months apart. This was a high grade discovery that featured 2,000 ounces per vertical meter, much higher grade than what Seabee was mining. It was quickly brought into production within 3-years. Despite all the financial issues that followed, and after being down so much, I was very hesitant, but after successive updates at the Santoy Gap, I began doubling down significantly. The effort brought my average cost down to .25 cents. Once Santoy was brought into production, the company’s fortunes changed fast. Costs went down materially, margins soared and production growth surged, leading to significant FCF generation. There was a lot learned about this deal and a lot of luck as well. I took these lessons learned and incorporated them into my investment process. The exit culminated with the acquisition of Claude by Silver Standard, which is now known as SSR Mining.
https://www.northernminer.com/news/claude-resources-a-turnaround-story-dundee-says/1003543043/
$KL | Kirkland Lake Gold | Acquired by Agnico Eagle | Profiled extensively at the $5-7 US price on Twitter.
https://twitter.com/i/moments/878686941901975552
Significantly reduced position following the Detour acquisition as profiled here: https://economicalpha.blog/2019/11/27/kl-takes-a-detour/
Scaled back in over a period of time and returned to significant size on the exploration results being witnessed at Detour.
Kirkland Lake went on to get acquired following the Detour mid-term resource update, which was not expected by the market. I posted about this “aha” moment less than a month before being acquired by Agnico Eagle.
Closed out of position at $45.
$WDO.TO | $WDOFF | Wesdome Gold Mines | Profiled extensively in May of 2018 when it was trading at $1.50 US and Kiena valuation was not priced in to the stock. Today it is trading north of $12 US.
https://twitter.com/i/moments/1002913388501065728
$AGB.V | Atlantic Gold | Acquired | Profiled extensively prior to commercial production at Moose River Consolidated at around $1-1.20 US. Wrote this article in January 2019: https://economicalpha.blog/2019/01/27/atlantic-gold-corp-phasing-in-on-what-could-be-ahead/. It was then promptly acquired by St. Barbara a few months later in May of 2019 for $2.90 CAD in cash, or $2.20 US.
https://twitter.com/i/moments/1003277218401972229
$MAI.V | $MAIFF | Minera Alamos | First profiled in June of 2019 at around .12 CAD cents. At the time, I had just met Doug Ramshaw at the JTVIR conference. Minera was about to get through a painful warrant overhang. After the meeting, I initiated my first position: https://economicalpha.blog/2019/06/26/a-few-mining-names-i-am-watching-as-gold-breaks-1400/. Since the week of June 19, 2019, Minera is up 500%, from .11 CAD to .74 CAD, outperforming most of its emerging producer peers. I covered it several times on Twitter and wrote this article back in September: https://economicalpha.blog/2019/09/24/minera-alamos-update/. Since this article Minera is up nearly 300%. The gold price has of course helped, but the outperformance is attributable to management and execution.
Minera went on to buy their next asset, Cerro De Oro, as described here: https://economicalpha.blog/2020/08/04/minera-alamos-announces-deal-for-cerro-de-oro-gold-project/
I have been buying the recent weakness that the company has been witnessing since the Gold market peaked in August of 2020. I profiled this as can be seen by the tweet below. Expecting good things for the company over the next 12-36 months, which is why I am positioned accordingly. I see very similar characteristics here that I saw in Claude, Kirkland, Wesdome, and Atlantic.
Simply put, Minera is Wesdome 2.0. The same setup. Going from a small producer to mid tier in the next few years. Santana starts producing now and scales up through 2023; Cerró de Oro starts in 2023 and scales up through 2024. La Fortuna starts in 2024 and scales up by 2025. 3 year production growth from basically 0 to 150-200k. Modest cap ex to do that. $25m for CdO and $35m for La Fortuna. Santana already built. All while this development, production and scale is happening, all the properties have exploration upside and there will be a few nice surprises along the way. Minera bought CdO for next to nothing really. They’ll do another one of those I’m sure. Lots of catalysts late 2021 through 2023. No other junior out there offering this value proposition.
Corvus Gold | KOR.TO | KOR | Acquired by AngloGold. Profiled extensively here and first wrote about it on this blog post: https://economicalpha.blog/2019/10/20/552/.
Due diligence included doing a site visit twice.
The Company would eventually get an offer from AngloGold for $4CAD. The offer was ultimately increased to $4.10 CAD. My entry was between $1.25 and $1.50 USD.
