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I do :-)
Hello, does anyone want to share their thesis for this stock? Nobody wants to sell it... but nobody wants to buy it either! So little liquidity here - sometimes just one trade per day. So if there were a catalyst it could presumably move very quickly in either direction. Market cap is only twice EBITDA but they have apparently reported one-off losses due to a change in how they account for property leases. Clearly in a risky sector, but valuation seems low even for that. What do you think??
Icarus69 : regarding your question on China supply/demand, I'll just repeat comments taken from a Terry Perles interview and Crux Investor's article - others may have more info.
A decline in Chinese domestic demand for steel production (e.g. due to property industry decline) simulatneously reduces both supply and demand for vanadium, because most Chinese vanadium is produced as a by-product of iron ore extraction, and much Chinese demand for vanadium is as an additive to steel rebar for buildings.
Away from the property industry there is also the China 'blue sky policy' which reduces supply because it limits the volumes of steel produced for export and therefore the vanadium produced as by-product. However some claim this doesn't reduce demand because only a small portion of the exported steel is rebar.
Hope this helps. Ev.
Thanks for your kind words Seahawk. Yes, SeaHawk is talking about the Lassonde curve (Google it), and this has a slack 'orphan period' for 1-2 years after initial excitement whilst the company goes through the 3 stages of feasibility study. This would suggest re-entry time for those who want to invest in taking Rukwa to production would be end of 2022 / some time in 2023, if we keep the schedule given in the corporate presentation. Though often remarkably accurate and a helpful way to think about things, Lassonde is just a simple model and it assumes single asset with slow-moving commodity price. You would need to keep an eye on any exploration of secondary assets (Eyasi, Balangida) as well as the Helium price, and any other factors you think will affect capital flows here. And yes, it may get bought out sooner, although I think this management team would have the skills to take it all the way through (unlike some). Thanks all for the constructive chat.
Very kind Swissydog - thanks - and to you!
ukchips yes you could think of it like that if it helps you. When I found this it was less than GBP 50m market cap and with the management team's reputation I thought it should be more fairly valued at least GBP 75m even prior to results, and would attain that as awareness grew. I was gambling on that rerate prior to results, and you're gambling on the next one after results come out. I got more than I set out to and that's enough for me (as of today I no longer have a position here). Neither strategy is right or wrong, both have risks, they're just different risks :-) Others will have different approaches from either of us. This is what makes the market. All the best with yours. Ev.
Thanks all for the comments on this. One of the things I was keen to convey was that, like many investors, transactions I executed today were part of a plan that was made 6 months ago, and very much not out of panic. The only adjustment made was that I had intended to sell before end of July and delayed by 2 weeks after reading the news about broken drill bit, so that I capture more of the upside during the build-up to RNS. I think if you're investing here it's important to know that many investors work like this, and particularly family office or institutions that have the larger stakes. The 26.5p price I got today may absolutely represent a good deal for someone who is more of a helium specialist than I am, and has greater certainty about the outcome than I do. The point is that these outflows will happen, they are not panic, they have little to do with what's on Twitter, they are just part of the process of building a mine. This means if you look for them they are an investment opportunity for those who want to invest in the next stage, as long as you understand exactly what risks you are getting into. I hope this is helpful to some. Ev.
...will be sold tomorrow. I wanted to invest in the initial drill campaign, and now it's over to those who will buy from me to invest in the outcome, just as some might later buy from them to invest in the feasibility studies, and later others in taking it to production. All valid strategies, all useful to the company in staying funded, keeping its cost of capital low, and creating employment for its workers.
Why am I writing this post? I was a bit alarmed by some of the messages on here about people putting life savings into this in the belief there will only ever be buyers from here forwards; and then clearly letting their emotions get very involved in their decision-making, with comments about how people who sell are not 'true believers' etc. The fact is everyone on here has different needs and everyone on here will have a different strategy. It will take years for this to get to production and it's not just one big opportunity but a sequence of smaller investment opportunities, each with their own risks and rewards. There will be buyers and sellers throughout, and good luck to all of them.
Is there a likelihood this will 2x again in the next year? Yes. Is that my particular strategy? No. I was looking for a drill campaign in a useful industrial commodity that would give me 50% returns over 6 months. I more than got what I was looking for.
If you're invested here and especially if you're new to investing then I really hope you are running the strategy that works best for you. Your plan for when to buy, when to hold, and most importantly when to sell has to meet *your* needs and *your* attitude to risk. Don't worry if it isn't the same as other people. We all have different needs. That's what makes a market.
Good luck with your own strategy, whatever it may be :-)
Hi Odysseus (and hi Inthevoid too), great that it's going well for you. Regarding chat boards I would just say that if you're new to this the most important thing to keep in mind is that everyone's aims here are different and therefore each person's buy/sell strategies different too. As long as you have a plan and a strategy that works for you based on *your* needs and *your* understanding of possible outcomes then I'm sure you'll continue to be pleased. Some will invest in the drill campaign excitement, some will invest in getting drill results, others will want to come in post-discovery to invest in production, some will plan a combination of these things. All valid strategies. There will be buyers and sellers throughout. Good luck to all with your strategies, whatever they may be :-)
Haha yes WolfofWarks - agree with all of those things.
In the US the Robinhood trading platform was known to sell data about stop losses to hedge funds, but it was the hedge funds trading from this, not market makers. My belief is that only the broker you're using has knowledge of your stop losses - they're not generally known by all market makers unless your broker is as unscrupulous as Robinhood - but I looked for evidence of that in the LSE rules and couldn't easily find it - maybe someone else knows???
I like and own this stock because I like the level of risk and the opportunity, but my plan was always to scale out during the run-up to the drill. Plenty of opportunity beyond that, it's just not my personal strategy. To those saying they're hoping for a life-changing opportunity, what is your plan for when to sell?
Hi Setcentric, thanks for the updates - much appreciated. Your tweet says price are up "as structural deficit takes hold". Do you have a method for understanding how much of the current rise is underlying structural deficit versus transitory COVID supply shock? It feels like you're right, but would be interested to understand your thinking. Thanks, Ev.
Haha it's ok I don't use LSE too often myself...at least CGEO is free of 'ranting' compared to other stocks on here, but that's only because the number of people who have ever commented is approximately 3!! :-)
Good spot regarding the 300k seller, thanks for that, and for summary of earnings call.
I still really like this stock for diversification - it's quite different from anything else I hold; and from a macro perspective - my thesis is that big family offices and institutions will look at it as the trend for re-allocation to emerging markets continues, and when they do it won't take much to move it, as you say.
Not a holder forever though - I will be pleased to sell a bit to those people once they start buying.