3 Recent Buys – SWA, NSU, CDB

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After having a quiet Q2, the number of purchases just in July are adding up. This post will document 3 recent purchases in my portfolio, couple of which borderline on speculation.

The first purchase is a microcap gold exploration company and the other two are focused on copper.

  • Last week, I opened a small speculative position in Sarama Resources Ltd (SWA.V). This is a gold exploration company that is focused in Burkina Faso, and holds land rights in a very lucrative part of the world. I initiated a position with 7,500 shares @ C$0.155. Special thanks go to Mining Book Guy for bringing this company to my attention…he has been making videos on this company for a while and has been trading in and out, and Sarama has been on my radar for almost a year now. Finally, I decided to initiate a position in this company. To provide a quick hash, the company is a microcap, with a marketcap of $20M. The company holds interests in 2000 km2 in the South Houndé belt. In addition to exploring gold by itself, the company also holds joint ventures with some larger companies such as Acacia Mining. Instead of repeating all details, I will simply point interested readers to check the investor presentation. What looks very interesting is that the land packages available are strategically placed and may result in fairly low grade gold findings, but Sarama could be a target for acquisition by one of the mid-tiers.

Buying a copper-focused company has been on my radar for a while now. To this day, I kick myself for missing out buying Ivanhoe Mines Ltd (IVN.TO) at $0.97 last year. I still curse myself for almost putting in the buy order in my brokerage account and then wasnt too sure and missed out. In the subsequent months, I saw the stock price climb and multiply 5x and turned into one of my worst missed opportunities. Anyways, I missed that boat, but the copper sector still has a very bright future as the world takes conscious steps for a greener/cleaner future, and as a result, I decided to initiate position in the following two.

  • I initiated a position in Nevsun Resources (NSU.TO) @ C$3.24. Nevsun is a top tier copper producer and has interest in two massive mines, one in Serbia (Timok) and the other in Eritrea (Bisha). The Eritrean mine scares a lot of folks, but Nevsun has successfully conducted business there for decades, and has resulted in some steady performance for the company. In addition, the Timok project in Serbia is a world class resource at 1.7MT @ 13.5% copper and 10.4 g/t of gold in indicated resource, and 35MT @ 2.9% copper and 1.7 g/t of gold.
  • The other position I initiated was in Cordoba Minerals Corp (CDB.V) @ C$0.76. Cordoba holds interest in San Matias Project in Colombia, which is a district potential exploration scale for both copper and gold. The initial inferred resource show 53MT at 0.7% copper and 0.37 g/t gold, which is low grade, but the scale is big enough to potentially make it a good potential. Cordoba has been in a bit of a selloff due to the agreements in place with HPX (a Robert Friedland company) which could buy upto a 51% stake in the project. Whole HPX has been a bit cold towards the project compared to other exploration opportunities, Friedland still speaks highly of the project, and as he put it at this week’s Sprott Symposium in Vancouver “…a very attractive lottery ticket”. This transaction is however, a bit of a gamble, as a new deal was struct recently between CDB and HPX, which will result in share dilution. For this reason, the share price is being punished, and I believe that it is over-punished and is not that bad a deal for CDB considering that HPX already had a stake in the project. Time will tell if this speculation will pay off.

Full Disclosure: Long SWA.V, NSU.TO, CDB.V. Our full list of holdings is available here.

6 thoughts on “3 Recent Buys – SWA, NSU, CDB

  1. What’s up with all these mining stocks? Why not just buy the Dow Jones, S&P 500, and Nasdaq at record highs?

    Commodities are useless in today’s society or did you not get the memo?

    LOL, cheers R2R. I like the Nevsun pick the most for upside potential. Big fan of Timok in Serbia. Eritrea is scary, but they’ve been in the country for 20 plus years so seem to have a handle on that situation.

    Don’t go to sleep on NexGen btw… Tier 1 world class in Canada.

    Happy Hunting!

    • Haha thats been the kind of thinking that has driven the broad market to all time highs, isnt it?

      Thanks for reinvigorating the idea of investing in copper…it was sitting at the back of my mind and finally when we had that chat earlier, I figured that I better open a position.

      Will check out NexGen. Uranium is something that I am not crazy about…but will take a look anyway. Thanks.

      R2R

  2. Nice road always like hearing about these resource buys. Ive thought of getting a copper producer but cant find a good dividend so have passed. Obviously that has hurt in the past. I was going to buy teck at 4$ but passed cause of the lack of dividend.

    • Unless we are talking about royalty and streaming companies, no company in the natural resource sector really has any business paying out dividends; the sector is just way too cyclical and the downturns typically overshoot and catch everyone by surprise (in a bad way).

      In the depths of the bear, these companies really need to be acquiring assets, drilling like mad and improving operations as best as possible to benefit from the impending upturn. A dividend burn at the bottom is the equivalent to shooting yourself in the foot. It’s like us everyday investors unable to buy low b/c we are out of spare capital.

      Just my thoughts, but even a company like Nevsun, really, I think its in the company and their shareholders best interest to eliminate the dividend and go full throttle on proving up and developing Timok.

      If you want dividends, go buy JNJ, PG, KO, PEP or something far more reliable than natural resources…

      • Couldnt agree more with FIFighter. The resource sector is a terrible place to expect dividends from, unless you own a streaming or royalty company.

        For the most part, I am happy that money is kept in the company instead of wasted on buybacks and dividends to appease investors and used for critical work. If a highly cyclical industry like mining cant figure out what to do with the extra cash and start returning it to shareholders via dividends, I think that management is being very short sighted.

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