Question: May 8th 2023
Don, I have a question. The ten-bagger list looks great. Many of those developers are in the “orphan” period such as First Mining. When is it a good time to buy those developers and on what criteria?
Excellent question. I look for red flags for those to avoid (note that I still buy some with red flags, but I tend to buy those with very few).
1) Path to production. I want to see a company that is not giving guidance (a plan) to achieve production, but also progress.
2) Ideally, construction planned for within 3 years.
3) Enough insiders to avoid a takeover attempt. I want the insiders motivated for big returns (aligned with shareholders like myself).
4) Highly undervalued. I prefer 10-bagger potential for dev plays, but at least 5-bagger potential.
5) Good location. This is subjective, but the better the location the more inclined I am to like it.
6) A good management team. Ideally, a team that has built and operated mines before.
7) A large mine with a long mine life (at least 10 years).
8) Economic. An after-tax IRR of at least $25% at $1600 gold. A cash cost of less than half the spot price.
9) Ideally, a capex under $200M. High capex mines add risk of dilution and capex funding issues.
10) Ideally, a quality grade that doesn't depend on base metal offsets.
Note: I just wrote that. My book says something similar.
No. I only focus on PM miners.
CZR wasn't in my database. I'll add it next month. Thanks for the tip.