Aside from the exuberance surrounding the tops of bull markets, the general investment public is uninterested and underinvested in natural resource equities, says Matt Geiger, founder of MJG Capital Limited Partners. Geiger views the general apathy toward natural resources as an opportunity, and profiles three companies that he believes are in position to break away from the herd.
For those underweight natural resources, it is not too late to adjust one’s portfolio—here is still plenty of money to be made in this current bull cycle. We are seeing signs that the next eight years will be starkly different from what we’ve seen over the past eight, which were the rising U.S. dollar, low interest rates, currency devaluations in the Western world, rising stock markets, falling commodity prices, low inflation, etc. Times are changing, and it would be prudent to shift exposure from the S&P 500 to natural resource equities.
The companies profiled below are on my radar as outstanding opportunities.
Viscount Mining Corp. (VML:TSX.V) is a prospect generator building a portfolio of high-quality precious metal properties within the United States. Viscount’s two core projects are Cherry Creek (East Central Nevada) and Silver Cliff (South Central Colorado).
With a current Enterprise Value of ~CA$22M, Viscount’s shares are a prudent (though not riskless) speculative bet on two highly prospective precious metal projects. Each of these projects has the potential to generate CA$100-250M in value for Viscount shareholders, but results must be delivered on both fronts over the upcoming 12 months.
In June 2016, the company closed an oversubscribed CA$2.3M financing at $0.50 with a full warrant at $0.70. The deal brought additional strategic investors onto the shareholder register, including Toronto-based Gravitas Securities, Sprott Asset Management and the CEOs of two North American silver producers.
The financing ensures that Viscount has a 9–12 month …read more