The Wrap: Are The Doldrums Finally Over?
September 12, 2021
After the usual dog days of July and August - almost like clockwork - the markets turned around on 1 September. At the lower end of the markets, September, November, and December usually see the bulk of the year's profits. October is usually not as good as people are afraid of a general market collapse - most major crashes have occurred in October. January through April are historically the other good months, so hopefully we are heading into the better months.
Lithium and the other EV stocks performed well towards the end of August, pulling E25 and FRB higher, but were overshadowed in the first week of September by the resurgence of uranium, which drove our uranium stocks up sharply after a long spell sitting on our boards waiting for the waves in a flat ocean.
The Sprott Physical Uranium Trust Fund (SPUT), now listed on the TSX (U.UN) and hopefully soon to be listed on the NYSE, is filling up with cash and starting to buy relentlessly in the uranium spot market. Also, as expected, the major uranium equity funds were suddenly flooded with cash last week and they will begin to spend it aggressively buying up most of the large uranium stocks as well as new retail investors still FOMOing in. (We believe the biggest URA and URNM both publish their holdings and approved stocks - which is worth studying - as they will probably be getting lots more new money in over the next months too.) So hopefully we can now watch our uranium stocks potentially go 'nuclear' if the bull market continues over the next 24 or so months, which we fully expect it will. So let us take another look at them.
92 Energy (92E.AX)
Little 92E with its previously ridiculously low market cap and only 60 million shares on issue went on a blistering run to open the month, jumping nearly 100% intraday last week. \ The micro-cap Athabasca Basin explorer released news that it has found elevated radioactivity in its maiden drilling campaign in Canada. Drill hole 4 was a good hit, with assays due back in about four weeks or at the end of September. 92E said the summer drilling program will be paused to allow for interpretation and analysis of the data. Meanwhile, the company’s share price climbed from a summer doldrums low of A$0.22 to reach a recent high of 74 cents. With such low SOI, market cap and experienced uranium geologists at the helm this stock may need to consolidate a bit after it’s recent sharp run-up but can easily climb much, much higher if more sexy exploration results come back and the uranium story and spot price keep growing.
Deep Yellow Limited Options (DYLO.AX)
Called on January 1 this year, these geared options on the well-known Namibian explorer also moved higher as its head co DYL announced an impressive indicated mineral resource. The options which we first called at 12 cents ran up from a recent low of 18 to a high of 68 cents in just the last few days – which perfectly exemplifies what we have been saying about just waiting patiently like surfers on a flat ocean – the waves just arrived suddenly. DYLO is now up 466% in the 9 months since we called it, and hopefully has much further to go.
Elevate Uranium (EL8.AX)
EL8 announced it had identified mineralisation at Namib IV on August 10 and later the addition of Dr Andy Wilde from 92E . The Namibian explorer, which we still see as having the best value of all the ASX uranium stocks, has now also moved up 250% from our 17.5 cent call 6 months ago to hit 66 cents this week. It’s safe to say we are elated with EL8.
Zeus Resources (ZEU.AX)
On 3 September, Zeus was, unfortunately and somewhat surprisingly after recent discussions with the company, suspended by the ASX quoting the 12.1 obligations rule which states that “in the ASX’s opinion, the level of an entity’s operations must be sufficient to warrant the continued quotation of its equities”.
This means ZEU had not proven to the ASX they had improved their financial condition and undertaken sufficient work on their Australian tenements before the 3 September deadline they were given by the ASX six months previously.
This suspension seems quite harsh as ZEU had just raised A$1m, and now has nearly A$2 million in the bank (more than many other junior explorers) and had also submitted to the ASX their planned work schedules which were due to start just three days later on 6 September as they had been delayed in being able to mobilize people sooner due to Covid and the shortage of workers and equipment given the tight market for skilled mining services in WA. We were informed that the ASX had indicated they understood this situation and were ok with it – then they slapped a suspension on them anyway? The company now has sufficient funds and workers on its two Australian tenements (since the 6th – exactly as agreed), So hopefully this misunderstanding can be sorted as soon as possible. Management is now pressing ahead with work as quickly as possible and furthering the planned acquisition of new properties too. The lawyers are on it, so fingers crossed the ASX listing officers will act reasonably to help resolve this issue. We will announce further information as soon as appropriate.
Whilst on our uranium calls, just a quick note about our other two 10 bagger junior uranium calls this year.
Aura Energy AEE
We did not count AEE at half year as it remains suspended as it could not come back on to trade as anticipated as the ASX, in their wisdom, decided to take a few more months to examine the company’s projects and financial plans.
AEE however, continues to trade in London under ticker AURA-L and also moved 100% higher this week. In addition, they produced a 10% upgrade to their resources in Mauritania to a huge 56 million lbs at surface. The expected re-listing date is now October.
We downgraded this call to a multi-bagger because we were concerned that it was at risk under its US listing code: UWEFF that it too may be suspended due to lack of reporting. However, it still seems safe on its Canadian listing UWEH. We also found it hard to trade, and the management was unresponsive. That said, its healthy resources in Colombia and Guyana and it’s still tiny market cap means this counter is still a very likely candidate to 10 bag this uranium bull run for those with the cojones to buy it. This week for example it jumped up over 200% in two days from 11 cents to 37! Last uranium bull market hit a high of $90!
Industrial Minerals (IND.AX)
IND recently announced an air core drill rig had been secured for up to 10,000m of drilling. The high purity silica sand company listed on the ASX on 13 July. 10 Bagger IPO placements got in at 20c. Having peaked at 35c and now fallen back to 25 cents, and now with its small market cap of just A$6.9m, IND represents excellent value around here. We strongly recommend it as a buy.
The longer-term plan is for this tightly held company to progress towards production using a low capex subcontractor start-up model. The ultimate goal is to mine high silica sand at around A$30 a ton and sell it for over US$90ish which their current work model and market price indicate is possible. The company intends to move in the region of 300,000 tons of sand a year for an approximate Ebitda revenue of around A$30m per year. Given their small 28 million SOI this could potentially represent almost $1 per share profit - put that on any P.E. over 3 and this stock should 10-bag at the very least. This stock is very cheap now and a strong buy around here. The main issue for now is how long for them to obtain all the requisite permits. As usual, patience is required. Average in bit by bit from here or lower.
Element 25 (E25.AX)
Following this stock has been anything but mangan-easy in the past six months, but after failing to catch onto the electric vehicle party in July and early August, E25 has come to life since late August, rising from its summer lows of A$1.65 to currently sit back above $2 and reaching an interim high of A$2.23.
News of a second manganese shipment helped boost the share price, as did a promising announcement regarding E25’s continued work to achieve high grade product before that. The company website header states confidently: ‘the future has always been electric’.
Work is advancing on the Stage 2 expansion of the Butcherbird Project and feasibility study programmes to produce battery-grade high purity manganese sulphate, which will give this share price an even bigger boost. We still wait patiently for what we believe is an imminent announcement of a big deal on its high purity manganese.
King Island Scheelite (KIS.AX)
KIS has been very disappointing for 10 Bagger Club investors, falling back to A$0.16 on delays in the expected funding program for its unique Tungsten project. It has found support around the A$0.17 mark, but continues to test our patience, particularly through the frustrating lack of communication from the company.
However, word on the street is that the funding is now almost complete and the release of the news of funding, if well constructed, should boost this one back to the A$0.40+ region. But for now, yet again we have to sit and wait a bit longer like the surfers on the flat ocean, sound familiar?
Firebird Metals (FRB.AX)
Firebird fell to the low 40c range during the summer doldrums but more recently it announced significant manganese intercepts. from its drill program and is now trading back up around A$0.60.
This potential manganese producer has also taken another positive step towards a pre-feasibility study in the first quarter of CY22. Stay tuned because from now till Xmas there should be good positive news flow and we feel strongly that the “bird” could start its flight to 10 baggerland on the back of this news and of course, the ongoing EV boom.
DNK announced their own ‘Brexit’ recently to close its London Stock Exchange listing. The share price has been trading sideways of late, although the Danakali marketing department heeded the call from the 10 Baggers to up their promo game, including an interview on Crux Investors featuring DNK Chairman Seamus Cornelius.
Global potash prices continue to rally in price and we do believe the final funding solution with a major player is imminent. This first offer may not be at a great price but it should excite the market and then we would hope for higher secondary takeover bids to start showing up to nudge this share price higher.
Errawarra Resources (ERW.AX)
Things have been quiet for this little cashed up shell since we called it. However, there have been many updates recently on the ERW Discord channel. To summarise, negotiations are underway for a nickel project which other companies are also keen on. ERW has a low A$6 million market cap, plenty of cash and only 33m shares on issue, so it could fly fast if there is any announcement of a decent deal. It represents low risk for a potential high reward and so for us this is a very strong buy in our books right now - You don't want to be having to try to FOMO in after she gaps up and then runs north fast.
The only solution to that is to buy now and be patient, no matter how boring the wait – or how much you think you are missing other ops. ERW’s day will come, so we believe it’s best if we sit there like those alligators waiting in the muddy watering hole for the fat gazelle to come drink.
The company signed a second distribution agreement with leading automation supplier and integrator Key Plant Automation in the UK recently.
The 10 bagger member formerly known as Ryano, and now lovetheqpm has predicted a busy September with newsflow and a roadshow for KTG. Their widgit side of the business continues to grow and their advance towards getting one or two monster contracts in the nuclear dismantling, pipeline construction or military fields continues. The disruptive welding technology is a long hold but one that should be seriously rewarding in time.
Multibagger Stock of the Month
Queensland Pacific Metals (QPM.AX)
A tough one to call but with the battery stocks going Usain Bolt during August while the Olympics were on, QPM sprinted from A$0.14 to hit A$0.20 to open September. \ The prospective EV critical mineral producer recently announced it was proceeding to its due diligence phase. Can QPM and the other EV battery stocks keep it up? Check out the Discord multibagger channel for more info on these stocks and others.
Your club committee believes that cryptos are surely the way of the financial future and that the club has to be in this space. Not least because there are far more 10 baggers going on more rapidly in the space than in equites these days, but also because our crypto channels are getting the most traffic nowadays and attracting new crypto oriented members.
Therefore we recently set up a crypto 10 bagger call section. The committee however feels that they don’t know enough to claim to be experts, and are uncomfortable trying to be so arrogant as to try to call potential winners in a sector in which we know less than many other members, never mind the big guys in the market. Frankly we also don’t have the time or brain-capacity to properly research both equites and cryptos.
Therefore we are looking to form a crypto 10 bag picking committee from amongst those of you who do know more and would be willing to help out. For any of you who are interested to help on that committee please direct message Phuket Guy and let him know. Then we propose to set up a channel (either a private one for advising members to discuss potential calls on - or a public one so we can all see the committee reasoning and chit chat.)
Staked Luna Coin
After a short pause Luna coin took off on its way north to hit a new high last week at $43.80. The thorny issue remains of what price should we book the call at - when it was first called as a ten bagger by committee member Lunu in the crypto section ($4.60) and many of our crypto buying members started collecting it – or when we set up a crypto official 10 bagger section ($19) or a combo of both. Because, if we take its original 10 bag call price when members started buying it, it looks like it’s set to be our next 10 bagger so well done to @TonyM @Lunu and @Mianbao for the call. The committee still remains split on when to book the call four say when it was first called as a ten bagger and members started buying it- and two say only when it was posted “officially” in the new crypto 10 bagger calls section.
Bitcoin and Ether
Both this king and queen of the cryptos and their related equity offshoots (trusts, ETFS and related stocks continue their volatile ride higher step by step after their mid-year correction. Again we suggest averaging in and keeping collecting both counters as we feel both have much higher to go over the medium and longer term.
Cryptocart and Shopping.io
We feel silly having two similar coins called both in the same area, especially as neither are real decentralised coins, so we shall probably drop one (or both) soon. In the meantime, we are looking to get more serious, functional and useful alt coins into our 10 bagger calls section as soon as we can form a committee, so expect some new crypto 10 bagger calls out soon.
We are now nearing 990 members on Discord. Remember at 1,100 members the price for new members to join is going up to $300.
We intend to launch our email service this month as we have many followers and potential members who either can’t be bothered, or are not tech-savvy enough to join Discord.
Disclaimer: No financial advice given. You are encouraged to do your own research (DYOR) on the above mentioned companies and their strategy/progress and make your own financial decisions.