Month: June 2024

Perfecting your craft as an investor, especially in the junior resource sector, is a continual process.

One lesson that needs to be learned as quickly as possible is how important the people are to the success of a junior company.

Without good stewardship, a junior company is rudderless and doomed for failure.

Sometimes, the good people are overshadowed by the geology – exceptional drill results.

Investors forget that it was the management that picked the project and planned the exploration program.

Good people know what they’re looking for.

And, once they have found it, they systematically work at revealing its value.

But, the story isn’t done there, communication with the market is paramount – turns out the best people are good at that, too.

Dave Lotan, an uber successful and long-time investor in the sector, taught me that a junior mining company needs 3 types of people;

First, it needs a strategist.

A strategist works to form the overarching business plan for the company.

Asking and answering questions like,

• What jurisdiction are we going to work in and why?
• What metal will we focus on?
• What type of project fits our experience and technical know-how?
• From whom, when and at what price will we raise money?

Second, it needs a scientist.

The scientist is usually the geologist.

Having an exceptional exploration geologist can be the X-Factor to a junior mining company’s success.

They work hand in hand with the strategist to identify the best projects with the top risk adjusted potential.

Finally, it needs a salesman.

The salesman takes what the strategist and scientist have put together and is the main conduit for communicating it to the market.

Communication is paramount to the market recognizing the value in a junior mining company.

Without it, companies are lost.

All 3 people have to execute for the business to be successful.

Unfortunately, many junior companies only have 2 of these people.

It can still work, but there is an obvious gap that needs to be filled.

The very worst are the companies that only have 1 of the 3.

Unfortunately, if that is the case, usually they only have the salesman.

When there is clearly no scientist or strategist, RUN!

 

A Bull Market in 2024?

 

For me, the stretch of time between 2013 to 2016 is unforgettable.

It was the deepest bear market I had ever encountered.

I had sold my house and used ⅔ of the equity to buy a select group of junior mining companies.

Over those 3 years I saw my portfolio fall by more than 30%.

It was tough, I often wondered if I did the right thing.

Turns out, I did – 2016 was incredible.

The funny thing is, I didn’t even see it coming.

Rick Rule has often told me, and I’m paraphrasing, “investors’ outlook is influenced by the immediate past”.

It’s so very true.

For 3 years, all I knew was a falling market.

Companies would release good news and the share prices would fall – it was a liquidity event.

Worried investors were using the good news to capture volume and sell down their positions.

Sound familiar?

It should.

2022 and 2023 were eerily similar to 2014 and 2015.

Much like that period of time, I think today feels a lot like early 2016.

For those who don’t remember or weren’t in the market at that time, 2016 was the start of a bull market that changed my life.

I had hand picked a select portfolio of what I thought were the best of the best junior mining companies.

That portfolio returned me roughly 300% over that next year.

With that windfall of profits, I left my career in steel manufacturing to pursue investing full time.

It’s now been 8 years since I made the leap toward my own personal freedom and I could never go back.

When I look at the market today, my experience tells me we’re in for another one of those life-changing years in 2024.

Precious metals prices continue to trend upward while the junior mining companies are lagging behind.

This is where the opportunity is.

Just like in 2014 and 2015…if you can pick the right companies.

Speaking of picking the right companies, I will share with you the biggest win of my investing career so far.

It’s AbraSilver (ABRA:TSXV).

I first identified AbraSilver back in 2019.

It was selling for C$0.025/share.

The market hated it, completely disinterested.

But I saw something more.

I saw a company with a brand new management team – CEO John Miniotis and VP Exploration David O’Connor.

Using Dave Lotan’s 3 MUST haves for a junior mining company, I could see the seats that each of them would fill.

Miniotis is the strategist and salesman, while O’Connor is the scientist.

The people part of the equation was filled.

Next, I could see that they had a small but expandable gold and silver resource.

Exploration potential captures market attention almost regardless of the overall market sentiment.

Having it is a huge plus for any junior mining company.

The project, Diablillos, is located in Salta, Argentina.

Rightfully, there are question marks surrounding Argentina and its mining investment attractiveness.

I don’t disagree.

But, when a company has the right people and project, and is selling for less than its worth,to me, it’s an opportunity.

Finally, I was able to recognize where precious metals prices were headed and how AbraSilver’s story would attract market attention.

I took quick action and connected with John using my extensive network and participated in their next financing.

In just over a year, AbraSilver’s share price hit a high of C$0.82/share and returned the biggest win of my career so far – $0.025 to $0.82 = 32x!

Today, I still own and cover AbraSilver in Junior Stock Review Premium.

They now have 209Moz silver equivalent ounces in their Reserves and I think have the potential to add a lot more.

Not only this, but a major mining company – Kinross (K:TSX), just recently took a 9.9% stake in the company.

Without a doubt, AbraSilver is a top tier acquisition target by all the senior precious metals mining companies.

Will 2024 be the year they get taken out?

 

Interest Rate Policy Pivot

This past week, both the Canadian and EU Central Banks lowered interest rates for the first time since 2020.

It’s an enormous policy swing.

Especially given the fact that inflation isn’t gone from the economy.

Reducing rates now tells me that the gig is truly up.

To me, it’s only a matter of time before the U.S. Fed follows suit and lowers rates.

When the Fed does this, it will set the precious metals market on fire.

I fully expect to see the equities follow the metal prices to new all-time highs.

This is what we have been waiting for.

For those who have had the courage, you’re probably already sitting on some good profits with the move that we have seen.

Myself and Junior Stock Review Premium subscribers are.

If you have been waiting for that perfect opportunity to get into the market, I think this is it…

But, you have to pick right.

As I said, my analysis starts with the people.

Get the people right and you give yourself the best probability of making profits and taking advantage of this next bull market!

For those who want help, I highly suggest subscribing to Junior Stock Review Premium.

I changed my life back in 2016 by having the courage and smarts to pick the right companies.

Today, I may be a little older, but I’m a lot wiser and put together a portfolio that will soar in this next bull market.

Stay tuned for next week’s free newsletter where I cover a company which is on the cusp of becoming the sector’s next great mid-tier gold producer.

 

Until next time,

 

Brian Leni  P.Eng

 

Editor – Junior Stock Review Premium