Cycle Bottom Profile picture
Sep 17 7 tweets 3 min read
$GMTN heading towards negative EV

1m oz resource at high grade with positive drilling results

65koz low capex production ramp up, NPV 10x cap and expanding

Optimization issues on start up

Accummulation zone incoming 8-18c, below <12c 10x return potential

It's starting to tick the boxes
A) negative EV
B) free pounds in the ground
C) low capex ramp up
D) nice grade
E) 10x plus NPV upside
F) hated by the market
G) optimization could kick in 3-6 months time
H) cycle bottoming incoming over 4-9 months
I) low dilution risk Vs M&A
Please note any new bottoming theme over the next 3 to 9 months, one should have 5 candidates to mitigate stock specific risk.

If our #gold watchlist falls by 50% from here as the bottoming process kicks in, the average return will likely be 10-15x over the following 3-5 years.
Our #goldstock selection list is adding unique sub US$20m caps (negative EV is a bonus) with over US$200m defined upside via NPV achievement and continuous reserve expansion, low capex mitigates high dilution, as does healthy cash balances. Higher grade hopefully higher margins.
On the macro #gold front:

Likely worst case scenario:$1100-1200 (marginal cost) Gold if USD was to strengthen +17-25%, gold stocks would fall 50-65%

A more likely outcome:
$1400-1500 assuming 7-12% increase in the USD through 1H 2023 as markets bottom;
$1500-1600 = 3-5%
The secret sauce to locating the next set of incoming 10 baggers plus over 5 years in #cyclical #commodities:

Cap < 5% NPV
IRRs > 100%
Capex < 10% of NPV
Capex < 50% of Cap
Scalability of Resource>200%
Scalability of Production>200%
Healthy net cash position avoiding dilution
Examples of short term mispricing Vs medium term upside:

A) Negative EV and trading <0.5x CF < 3yrs out = potential 10x upside (based on average spot cycle assumptions)

B) PE 3x (lower end cycle commodity price assumptions) with capacity growth of 200% within 3yrs = 7-10x

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More from @BULLReturns

Sep 15
Did you know where the potentially largest #uranium mines are in the world? Do you know the company that has the most upside in Sweden reinstating uranium mining? $AEE

This scoping study level project has a sub $20/lb AISC given the huge credits from Nickel, Molybdenum and V. Image
Reality check:

Low grade #uranium mines with massive secondary credits = low AISC outcomes

The option value of the Swedish assets to be built into $AEE's stockprice for $5-8 of NPV is 10-20c over the next 1-5 months.
You have been warned $AEE

$URNM entry coupled with #uranium Mining ban removal = satisfactory result
Read 6 tweets
Aug 25
#uranium return run down from recent lows assuming #sput can drive the next up leg by a reasonable premium for 1 to 3 months: sector returns +50- 75%

Best in class Explorers <25m caps =+150-250%

Best in class Project Developers <125m cap = +100-175%

Pure ETFs +50-75%
Note new entrants into the #uranium ETFs for Sept and April for extra torque, watch for caps above US$50m not in the ETFs yet.
Combined ETF new entry often equates to 5-7% of issued shares for a nano #uranium stock this can be transformational given the short rebalancing timeframes.

Often, in bull market conditions the 2 month returns prior to entry can be 50-100% on triple ETF entry.
Read 4 tweets
Aug 23
What will $AHQ bottoming be 4Q 2022 as it concludes it's financing to optimize production?
Emotional response: negative short term outcome breeds further negativity....we generally look for these situations to act counter to the prevailing sentiment (provides great entry points).
Note at 50c prior to the announcement of the start up issues (slow economies of scale Vs fixed selling prices, insufficient capital to optimize equipment, supply chain bottlenecks) many thought this was going to perform. Now post the 85% discount many have the opposite view.
Read 4 tweets
Aug 17
For our followers, if you haven't yet seen how easy it is to make returns in the market (over the medium term), then it's very simple, at times of "apocalyptically bearish" conditions it's generally an entry point....whereas at times of "excess FOMO" its generally an exit point.
Where are we now? No man's land, which means most entry points are average, not compelling Vs June, with the depths of recession still an unknown, we are leaning on taking capital off the table, hence adding to dry powder.
Controlling your own greed and fear are the tools to make the right decisions.

Underpaying, early cycle leads to high returns

Overpaying, late cycle leads to losses

Awaiting for clarification leads to mediocrity

Early cycle vision leads to superior results

Read 5 tweets
Aug 15
$AHQ 3x returns over 12 months from recent lows, 6x assuming lower stupid dilution. The key is to evaluation opportunities in the eye of the storm....4 potential mines with combined NPV of $2bn and 1bn/t of resource, low capex start ups.

We will ride $CKA through 40c, if $AHQ continues to trade below 11.5c then a sector switch will look attractive.
Evaluating an investment in the eye of the storm: $AHQ

A) will the assets perform to specs within 24 months? Yes

B) how bad will the dilution be, will the valuation still be discounted materially post dilution? Yes

C) will non dilutive forms of financing be available? Yes

Read 4 tweets
Aug 15
Every time there is a new #uranium PFS or DFS come out we compare across the spectrum of projects looking for the best value at the lowest EV. Its still hard to beat 48mlbs recoverable, sub $30 AISC, 4-5mlb annual capacity trading on an EV < US$70m. Overpaying will reduce returns
ISR capex doesn't look so great when treated from a holistic approach
Rules of thumb for returns #uranium

<US$100m cap with NPV $0.6-1bn (AISC < $35)= 5-25x returns

$200-400m cap with NPV $0.6-1bn= 1-4x returns

Bonus tailwinds for the <$100m caps
- ETF entry
- low broker exposure to moderate
- no research to moderate
- low fintwit to high
Read 5 tweets

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