Disclosure: The following represents my opinions only. I am long ASCU, BNE, BTCC, CAPT, CGNT, DPRO, CDR, CVV, EQX, HSLV, KNT, LBC, MER, MMA, NDM, NRN, NXE, PTK/POET, RAK, TAO, TLO, TNZ, TUK, YGR (image credit to Semyon Borisov on Unsplash)
No one likes to wait. In this world of instant online gratification, patience is becoming an increasingly rare commodity, and yet, it can be one of an investor's greatest assets. I've sometimes thought that the characteristics that make good farmers are the same characteristics that make good investors. Arguably, the invention of farming was a precursor to investing. I say that because both require investing time and resources in the present with the hope/expectation of a positive future outcome (i.e., return), all grounded in learnings from prior experience.
"Waiting helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that." -- Charlie Munger.
No reasonable farmer would ever expect a crop to grow overnight, just as no reasonable investor would expect a company to reach its full potential within a week of learning about it. When growing crops, you've got to watch, and wait, and watch some more, and wait some more, and then eventually, one day, you wake up and realize that you've got a field full of corn, or potatoes, or strawberries, or whatever. Stocks are no different. You find them, you read up on them, you decide whether or not you like them, and then you make a call as to whether or not you want to plant some in the field that is your portfolio... then you see how you do.[urcr_restrict]
Sometimes the season isn't right, so you file the company in the back of your mind. Sometimes the idea seems so timely that you act right away. Somewhere in there, your level of knowledge about the company, its industry, and its history will determine what action you take. Never heard of a given crop (stock) before? That kind of makes the "plant or not-plant" decision a little trickier, doesn't it? You either rely on someone else to make that call for you, or you start reading up on it, or you go in and simply hope for the best. With so many potential opportunities out there -- there's always another idea five minutes behind the current one -- so patience is required even when it comes to selecting what to plant/buy in the first place. As Buffett likes to say, the great thing about being an investor is that you can watch a thousand pitches go by, as it is a game where there are no called strikes.
How do you get this patience? Time and experience. It's the only way. There's nothing like following a company (or management team) for five, ten, or even twenty years, and then deciding it's time... After that long, even if you've just been following it intermittently over the years, you may have a sense of the company's projects, the people involved, their ability to execute, their past mistakes, their successes, what they've learned and whether or not their business is about to bear fruit in the form of shareholder returns, or increased market interest, or -- hopefully -- both. And if you make that call, with all of that knowledge in your head, it's only then that you are an investor with the mindset of a farmer. If you find the right crop, but cut it all down too soon, your returns might be muted or even turn into losses. Plant the wrong thing and fail to recognize when you're better off plowing it under and starting over, and your returns will suffer as well. Along the way there will be hailstorms, flooding, droughts, pests, and disease that are totally beyond anyone's control, but for a farmer, there's always next season. Once you know about spinach, or wheat, or corn, you'll always know about it -- and this is what gives you patience. Once you have it, you can simply wait for when you think the conditions are right for one or more of the crops that you know and make some decisions about what to plant, or just wait for what you've already planted to bear fruit.
I've made some bad planting decisions and some very good ones over the years, and when I write these notes about what I'm liking, I'm often reaching back into a bucket of companies that I've followed for a long time. The overall market remains fertile, with resources and gold doing well as the U.S. dollar continues to trend lower, but getting the right companies at the right time is always the hard part. As usual, what follows is a snapshot of some of what I own and why I own it. Patience is a common theme.
This is one of those ones that comes from the list of companies that I've followed for a very long time. Talon's main project of interest for me has always been the Tamarack nickel-copper project in central Minnesota where it has earned a 51% interest from its JV partner, Rio Tinto. Talon can earn an additional 9% of the project (making it a 60/40 TLO/RIO JV) by paying Rio Tinto US$10 million and completing a feasibility study by March of 2026. Given that TLO's recent $41 million financing was heavily oversubscribed after some jaw-dropping assay results, I expect TLO to meet those March 2026 earn-in requirements to take its interest to 60%. For a long time, I just didn't care much about TLO because while it had a high grade nickel resource, the tonnage was small and I just couldn't get excited enough about it. However, there was always this geological model that said that if TLO could follow the system to depth, it could find other pools of massive sulphide -- and potentially large ones at that. So it was a "wait and see" story for me. Then, earlier this year, TLO announced the discovery of 8.25 metres of very high-grade nickel-copper-PGE sulphide (23.28% nickel equivalent, or 48.87% copper equivalent) located 150 metres below the existing Tamarack resource in hole 16TK0250. At that point, my ears perked up big time. Those grades were off the charts and way higher than anything I'd ever seen before from the project. The interval of interest was practically pure metal and clearly something separate from, but related to, the existing resource. After years of "meh", it was time to pay attention.
Soon after, TLO followed up by saying that it had drilled 34.9 metres of massive sulphide, in two intervals, in a hole that stepped out 68 metres from TK160250. That hole, designated, 25TK0563, ended up returning the best assay intervals I think I've ever seen from a nickel-copper project... an astounding 20.4 metre intercept grading 26.7% NiEq, or 53.4% CuEq, followed by a 14.5 metre intercept grading 32% NiEq, or 63.9% CuEq (beginning 13 metres below the 20.4 metre intercept). A 68-metre step-out might not seem very big, but when you're drilling into something that high-grade, you don't need a lot of volume to contain significant tonnage because the ore is so dense. Clearly TLO is onto something new, something different, something unique, and something supportive of the overall geological model.
The Tamarack project looked "okay" to me before this, but now I think this has potential for serious long-tail upside. No one knows how big this new pod of massive sulphide mineralization will be, but with $41 million in the bank now, TLO is going to find out with its ongoing drill program. I seriously doubt that they defined the edges of this new orebody with the first two drill holes, so stay tuned. There's a blue-sky case that could see TLO get a market cap in the billions, at which point its bloated 1.2 billion share count won't seem as relevant. Some very smart people with way more mining chops than me also agree with the notion that TLO could be onto something special here, including the legendary Robert Friedland, who was listed as a participant on the company's recent financing.
I haven't even touched on TLO's Boulderdash project which is close to Lundin Mining's Eagle Nickel Mine in Michigan, the only operating nickel mine in the United States, but that can be for another day. TLO has some long hits at Boulderdash that were interesting enough to attract Lundin Mining as a potential JV partner, but TLO's recent success at Tamarack and subsequent financing may dampen TLO's enthusiasm when it comes to optioning off its 80% interest in that project to LUN. Drills are active at Boulderdash, so stay tuned for more story to be written there.
I've said enough about TLO for now, but I've really just skimmed the surface and hopefully made you look a little deeper at this one. I flag it here because it is in the United States and it has the potential for material upside in light of recent developments with the drill bit and the fact that it was left for dead by most investors until recently. In the mining game, you're only as good as your last drill hole, so here's hoping for more of the same from TLO. If they continue to expand the footprint of the new discovery at Tamarack, interest will only build further in this name that was pretty much written off as recently as four months ago. What a difference a drill hole can make.
Tenaz, the energy all-star two-years running, still gets to go first. After closing its acquisition in the Dutch North Sea in early May, TNZ's PDP reserve value stands at C$18.25 per share, its 1P reserve value is $27.75/share and its 2P reserve value to about C$42.00 per share. Those are after-tax NPV10 numbers. Notably, the acquired assets have one of the lowest base decline rates in the industry... and those after-tax reserve values don't account for exploration, development, and optimization opportunities that TNZ surely saw when they signed the deal to acquire them -- and have no doubt been refining. The share structure here is what provides such significant per-share torque -- with only 27.5 million shares outstanding, the leverage to operational and/or M&A success remains substantial. Tenaz is finally starting to hit the radars of real, institutional investors and, to use a baseball analogy, may be in about the third inning in terms of its path to becoming a 50,000-100,000 boepd producer. TNZ is no doubt well into the hunt for its next M&A deal, with around C$150 million of available liquidity and excellent access to additional capital if needed. Another deal could fall into the lap of investors at any time and the market knows it. I can't think of another energy stock that is at all-time highs out there. TNZ's mixture of competitive advantage, value, upside, risk-reward, and timing is a special thing and I still believe that patience will continue to be rewarded here.
TNZ is a rare animal. The management and technical expertise within the company is deep and the competitive advantage in its market niche is very real. There is a unified vision and culture that runs all the way through the organization, including its shareholders, and I can't say enough good things about the team and its capabilities. If you're reading this and you happen to be part of the TNZ team, know that you are doing something special in the energy sector and that your shareholders are very, very appreciative of your efforts. I tip my hat to you on a job well done so far and look forward to your (our) continued success.
Just go back and read prior posts if you want to get the low-down on CDR. The main development here is that Condor should start drilling gas wells this quarter in Uzbekistan which could produce some eye-catching results, so stay tuned. Meanwhile, its Kazakh LNG initiatives continue to move forward, with sales from its first modular LNG plant expected to start in Q2 2026. The stock still trades below the price of its $1.90 financing in late 2024, but that won't last forever. Patience here should be rewarded -- potentially quite handsomely in if the Uzbek and Kazakh business plans play out as hoped. Condor will be a sleeper until it isn't. I expect this to march higher in due course as management starts firing on two cylinders.
TUK is reminding me why penny stocks can test my patience. After much hope for the second well into the company's new Mississippian play, market interest died down when that well completion got a little complicated/ambiguous... and when you're a small company, inactivity and/or uncertainty is a real drag. No matter, the company is funded for a third well in late Q3/Q4 and the first well continues to flow at impressive rates, so I'll just wait and see here. Proving up a new play/oil pool isn't easy and TUK is illustrating that point. I'd prefer it if they made things look at little easier with the third well though... so the pressure's on guys if you're reading this.
Nothing new here. The stock can still be had for around a dime depending on the day, and the company continues to wait on approvals in Egypt for its "tuck-in" acquisition. The path for TAO has to involve a farm-out of the ARF play to an operator that doesn't mind doing a little science in exchange for the chance at a huge oil prize. If it can close its hopefully-still-pending acquisition and attract a farm-in partner, things will look a lot different for downtrodden TAO. I'm sure that Abby and his team are keenly aware of this, so I'll just wait and see what they do this year. This is one of those crops that has died on the vine for now, but Abby has done well in the past, so I remain long, but am thankful that other stocks have picked up the slack. There's an Egyptian bid round coming up that TAO will participate in later this summer (the bid round ends on August 31st) which could expand its footprint. While they still have a ways to go in terms of proving up the long-term viability of the Abu Roash F play, TAO is a cheapie with a chance.
I group these western-Canadian energy stocks together because they have similar market caps and appear to represent intriguing value in the small-cap energy space. By my math, both are trading at something like a 25% free cash flow yield and have the capacity to buy back shares and/or pay dividends. YGR has been quietly paying down debt for years and the company's debt level is finally getting to the place where it could start to pay dividends in line with CEO Jim Evaskevich's long-term goals. Jim owns a ton of stock and is well aligned with shareholders. YGR trades at about 1/3 of its PDP NAV and while it has high declines and is a bit "gassy", AECO isn't a four-letter word anymore with LNG Canada coming onstream.
BNE hasn't paid off its debt, but it has restructured it, replacing its bank debt with senior secured second-lien notes that mature in 2030. That gives the company a market eternity of breathing room. Meanwhile, BNE has pivoted to a play called the Charlie Lake, which provides much better capital efficiencies than the company has seen before. In other words, the company can spend less money to maintain or grow production than it did before, thus increasing free cash flow available for share buybacks and/or dividends. Watch this Charlie Lake play through BNE's quarterly updates... it looks really good to me and I think it gives BNE more flexibility to return capital to shareholders than it has had in a long time.
While YGR and BNE are both too small for most institutions, they're just fine for me, so I'll wait for the free cash flow potential to become apparent to the market, at which point I think both stocks will re-rate higher. I don't know when that happens, but as long as things keep going as they have been for both companies, I think it's just a matter of time.
Lastly on energy, I've followed Meren Energy (MER.TO, last at $1.67) since its inception as Africa Oil, and with a quarterly-paid dividend yield of just over 12%, patient value investors may be wise to start looking at this one. This is a quality offshore Nigerian oil production project operated by affiliates of France's TotalEnergies with appreciable exploration upside potential. Meren's financial interest in the project was consolidated with the absorption of Prime Oil and Gas in exchange for shares earlier this year. The consolidation was accretive on per share metrics and it simplifies Meren's ownership in the project for the market. MER carries a large cash balance and continues to reduce its net debt by way of its strong free cash flow. With the stock finding chart and fundamental support at the $1.65 level, I think this is an interesting level for me to own a little, so I do. If it dipped to its 10-year low of 90 cents, I would double my existing small position, but as long as the dividend is maintained, I don't see that happening. A lot of volume has been going through the stock lately, which makes me think that a short-term bottom may be in. It's worth pointing out that Meren's significant holdings in Namibia's emerging offshore oil province, including the company's indirect interest in the potentially large Venus development project, come essentially for free at these levels -- so like I said, value players may find this attractive here.
There was a warrant overhang in MMA that has now cleared and the stock has been "hanging in there" as of late. I'm waiting for updates on a few fronts here, including oxide drilling at Kazhiba, drilling of sulphide targets near First Quantum's Kansanshi, and the holy grail of wishful copper exploration mega-dreams at Dumbwa. MMA is an easy hold for me given its potential strategic fit with Kansanshi, so I'm just sitting on my hands here.
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* note: This is almost a carbon copy of my last comment on LBC) The rebranded CGNT has been a poor performer so far, but nothing about my view here has changed. With part of its project carved out of a forest reserve late in 2024, all of LBC's 600 million tonne copper-molybdenum resource at Macoa is now out of the reserve area. I view the 600 million tonne resource as being a starter point given the number of undrilled porphyry centres and initial indications from expansion drilling. I'm not sure what gets CGNT lit, but the company continues to drill infill and expansion holes at Macoa that are comparable to those of much more expensive peers. The remaining exploration potential is impressive and CGNT continues to drill with the intention of proving up the potential for a significant increase to the resource tonnage. With a market cap of just $16 million, CGNT is way, way under the radar of the street, but if not-that-different Solaris can command a $1.2 billion market cap based on its Warintza project in Ecuador, I'm quite willing to stick around and see how the CGNT story plays out. They are currently raising $5 million at 20 cents, so the share printing press keeps churning out paper. Here's hoping the dilution slows down and that the results start to catch some eyeballs. I'm patient, but not that patient when I keep on getting diluted by financings at prices that make me feel like I'm stuck in the mud. Drilling is ongoing. If results start backing up the theory that this could join the 1 billion-tonne-plus club, I think the market will come around to it.
Other copper stories of interest to me still include Foran Mining (FOM.TO, last at $2.70), Northern Dynasty (NDM.TO, last at $3.14, Taseko Mines (TKO.TO, last at $4.50), and Arizona Sonoran Copper (ASCU.TO, last at $2.35). Despite delays and cost overruns, FOM is a generational copper asset that is going into first production in late 2025-ish and commercial production in H1 2026, which makes it a rare bird in the copper space. The stock isn't exactly cheap, but it isn't expensive either, and its rarity likely makes it an acquisition target for a larger and long-game-thinking mining company. Once in production, FOM will have enough ore to produce for multiple decades. NDM, TKO, and ASCU are all still a few of the ways to play the "Trump trade" as they have development projects in the U.S. (the "Trump trade" on copper really heated up on Wednesday with his comments on copper taking COMEX copper up ~10% in a day, to $5.50/pound). TKO is the most advanced with the Florence in-situ leach project expected to start up in late 2025, while ASCU is a solid (and large) meat-and-potatoes redevelopment/expansion project with favourable permitting tailwinds. NDM has frustrated many over the years with endless permitting delays/denials in Alaska, but the company's view that the process has been flawed resonates with me and a updated status report from the EPA is expected on or around, ummm, tomorrow. My hopes that things would get "hopeful" again with NDM has been realized with the stock up ~200% since I last flagged it... and owing to its massive scale, a little more "hope" could still take it higher from here. At this point though, I'm riding a free NDM position and I'm not sure I'd buy it ahead of the EPA status report, but lots of people have been, so go figure.
******UPDATE: No agreement was reached as of July 17th, and folks smashed NDM as a result. I actually bought some back on the panic as NDM will focus on obtaining a summary judgement in its challenge the veto of the initial approval. Seems like a decent strategy.
Copper projects in the U.S. have been given a "yuge" shot in the arm by the Trump administration... so having some exposure is probably worthwhile.
For those wanting to bet on advanced U.S. copper exploration, previously-discussed-here Hercules Metals (BIG.V, last at $0.75) is actively drilling with five rigs at its Hercules property in Idaho and may be starting to crack the geological code there. I don't own it currently, but I'm thinking about it again as a result of the company's latest update, which suggests that they are getting a handle on how to follow/define the mineralized trend -- which could be big.
I don't have much news to report in the way of golds, so just review prior notes for some comments and ideas there. Some new comments that I'd make there include... 1) me dropping Miata Metals (MMET.C, last at $0.335) like a hot potato after initial drill results failed to impress (this could still turn out, but it's a "show me" story for me now instead of a "ride-the-wave-of-pre-drill optimism" story); 2) riding K92 Mining (KNT.TO, last at $14.65) calmly as the company continues to ramp up its production on-time and on-budget on its way to becoming a bonafide mid-tier producer; 3) Equinox Gold (EQX.TO, last at $8.48) turning into a "turn-around" story after the initial ramp-up at its Greenstone mine encountered some teething problems that make it attractive for patient value-minded investors... because it does look like it may be turning the corner now, with a discounted valuation, good scale, and a good jurisdictional profile after its merger with Calibre Mining; 4) Highlander Silver (HSLV.C, last at $2.67) is gathering market interest and momentum as it heads into reporting initial drill results from its high-grade epithermal San Luis silver-gold project in Peru which could reset views of the ultimate size potential there; 5) Capitan Silver (CAPT.V, last at $1.07) up around 150% since my last mention as it also heads into reporting drill results from its latest round of drilling at its bulked-up/consolidated Cruz de Plata silver project in Mexico... I've sold half at a double while keeping an open mind about it when drill results do come out; 6) Goliath Resources (GOT.V, last at $2.38) has started drilling and has been hitting the market with "relooks" at past holes, identifying mineralization that was previously unrecognized. Results continue to demonstrate that a very significant mineralizing event happened at its Surebet project in the Golden Triangle, British Columbia. The stock has been acting well and isn't far from its prior highs now. A breakout through $2.70 could signal a new leg up for the name.
One name that's caught my attention on the junior gold exploration front is Rackla Metals (RAK.V, last at $0.49). The company is actively drilling on its BiTe zone at its Grad property in the Northwest Territories, Canada. While remote, RAK is hoping for a large bulk tonnage deposit that might conjure dreams of Snowline Gold (SGD.V, last at $9.71) in the minds of optimistic speculators. It is very early days here, but a lot of smart money is watching this one. I own just a little, but will watch intently for results. There are 15 million shares coming free-trading on August 24th that were issued at prices ranging from 15 to 21 cents earlier this year, so keep an eye on that date. I'm not sure if those shares will come free trading before or after initial assay results come out, but if Rackla proves up something of appreciable tonnage and grade, it won't be relevant in the long run.
******UPDATE: Northern Shield (NRN.V, last at 0.085) put out visuals from its initial 3,000m program at Root and Cellar, and because I’m sure not everyone follows my posts on CEO.ca, I’ve copied and pasted my thoughts here: “If what they have hit shows interesting grades in those kind of rocks, it’s just about chasing/defining structure. You know the fluids are there and that they are doing what they are supposed to. A high grade sniff could be all they need to attract attention from the industry. Large greenfield exploration opportunities in areas with this kind of access and infrastructure aren’t that common. Before ARU hit, they just had sniffs. You have sniffs until you don’t. Show me some narrow hits in the right rock textures and I think the hunt is on. If we know the right process is working, and the regional geology is supportive of an alkalic magmatic event, and that the fluids are pregnant with metal, it’s just about chasing/defining structure. Come on NRN. One time!!”
No change here. I still just own Nexgen (NXE.TO, last at $9.50) as it is the best deposit, in the best jurisdiction, and it is on track for key permit hearing dates in the next six months or so, which really isn't that long in the grand scheme of things. When the permits come -- and with the local support, that's a when, not an if -- a takeout will be inevitable given its large scale and low projected production costs. Nexgen's deposit is a king-maker in the uranium industry. Personally, I think it will be bought eventually so I continue to hold it.
******UPDATE: CanAlaska (CVV.V, last at $1.03) put out some very impressive drill holes in the eastern Athabasca basin. The criticism is that the hits are deep, but they are well located and the grades are off the chart. More success could see folks get more optimistic, because in the uranium game, size matters and this has the hallmarks of a biggie. I own a little because the market cap is modest for what CCV could have. Oh, and Cameco is a minor partner in the project.
Poet Technologies (PTK.V, last at C$9.15, POET.US, last at US$6.69) continues to be a technology rockstar for me and while I've trimmed some, I remain long as an AI/data centre play. The company continues to progress its business plan, the AI/data centre theme isn't going away, and POET has a vey useful cog in that machine; so I'm still playing along with this one. The back half of 2025 could see real commercial orders for its optical transceivers and with the market interest and currency that the big players in this space now have, POET could easily be gobbled up by a much, much larger entity who recognizes that the future of AI data centres likely includes photonics; a field where POET is a real innovator which is approaching an inflection point in the roll-out of its technology.
I have some recent bitcoin exposure through owning some Purpose Bitcoin ETF (BTCC.TO, last at $21.76) based mostly on the technical breakout of the bitcoin chart to new highs. My squinting at the chart and rudimentary technical analysis suggests that the next stop for bitcoin might be in the $140-145k range, which is still a decent move from here (~20% upside) for what I consider "alternative cash". Traders are betting that ethereum will play catch-up with bitcoin, but I haven't gone there yet... bitcoin is plenty weird enough for me.
My pure speculation in the drone sector is Draganfly (DPRO.C, last at $7.09 and DPRO.US, last at $5.18), a recent add where I got lucky on a this drone-tech play with very few shares outstanding. Even a blind squirrel trips over a nut sometimes, and earlier today DPRO announced that its Commander3 XL drone was selected by a major branch of the U.S. Department of Defense (DoD) for intelligence, surveillance, and reconnaissance operations. I flag it only as something to keep an eye on, because while no numbers were included in today's news, the low share count means that this could absolutely rip if revenues ramp significantly as a result. This is a total speculation for me, so tread very carefully when a geologist starts talking about drone stocks.
Honourable late mention to Intermap (IMP.TO, last at $3.25). I've followed this one for a very long time and made a few dollars on it during its move up from the 50-70 cent range, but I haven't bought it back... yet... and it's having a bit of a nice move here. It was never a key position for me, but the company is really starting to hit its stride now. IMP has a proprietary, unique, and very valuable method of mapping terrain with great accuracy -- the kind of accuracy that is needed for insurance companies, defence contractors, navigation, and overall characterization of the surface of the Earth. Awareness, revenue, and earnings are all ramping up and the chart shows it. IMP doesn't have that many shares out, so it provides good per share leverage to its improving business outlook. A lot of the attention for IMP is based on a large Indonesian mapping project, but that's likely just the first of many projects that this data-gatherer-refiner-monetizer will see. I hope it dips because I want to buy it.
I never get to all of them, but I'm sure this is more than enough to chew on for another couple of months for those who made it this far. I hope my commentary on the importance of patience at the top of this note strikes a chord with some readers looking to add something to their market vocabulary. Patience is a very difficult quality to wield, but I think it really is essential for long-term success in the investing game. As always, the challenge is knowing what to be patient with, but that's where putting in the time to get comfortable with a company, its management, and its prospects comes into play.
Happy hunting.[/urcr_restrict]
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