Joel’s Mega Resource Roundup, Part 2 #RBD #JKX #RRE #EML #ARCM #ATM #HUM #MKA
At the time of writing the author holds long positions in some of the stocks mentioned
Happy New Year, wishing wealth, health and happiness to you all!
A year on from the mega resources roundup I thought it would be good to review many of the companies I covered at that time and see where they are today. I predicted all of the companies would do well in 2019 let’s see whether I was correct or not!
Stocks covered in this report:
Reabold Resources (RBD) – wrong -11%!
Reabold as an oil and gas company like many other oil & gas companies had its share price decimated earlier in the year. Mid way through the year the company was interested in a merger/takeover with Deltic Energy which went down like a lead balloon. At West Newton, Reabold’s UK on shore prospect, Reabold encountered approximately 62 meters of hydrocarbon column. There are rumors that West Newton is for sale, I still hold a tiny (sub 0.5% of pf) stake and it’d be great if managements enthusiasm can turn into shareholder returns.
JKX Oil & Gas (JKX) – correct +42%!
This time last year JKX oil and gas had increased production and reduced debt. Since then JKX has become completely debt free. gas prices were hit earlier in the year however with the recent increase in gas prices and a good quarterly update I continue to see substantial upside.
RockRose Energy – wrong -2.3%!
RockRose Energy was a monster holding for me – 40% of my portfolio which was great whilst oil and gas prices held up… During the year at one point the shares were in the £5s a more than 70% drop in value. For some reason holding large positions when they move up is a lot easier… Investors were rewarded by Andrew Austin and the RockRose team who secured an £18.50 per share exit for shareholders which was at the time a 64% premium to the share price on the 3rd July.
It’ll be interesting to see whether Andrew Austin can replicate any of his success with his Kistos (LSE:KIST) vehicle.
Emmerson – right 43%!
I no longer hold Emmerson shares, I believed that a financing agreement may take longer to arrange than I’d hoped. The doesn’t however mean that the shares have performed poorly!
My concern with Emmerson is dilution, Salt Lake Potash & Sirius Minerals have (for Me) shown that it is apparently nearly impossible for companies to get Potash projects into production without shareholders being diluted into oblivion. Fingers crossed that Emmerson are more competent than the former.
Hummingbird Resources – right +50%!
Hummingbird Resources have been massively helped by a rocketed gold price, were it not for this fact the share price would’ve been decimated, costs exploded and a Malian coup didn’t help matters.
Given the number of operational issues over the past few years I’m starting to question whether I should discount Hummingbirds forecasted numbers as they’re not good at hitting them.
Still with a little help from the gold price and a couple of well timed transactions, I recently covered Hummingbird for cube, I believe 2021 could be Hummingbirds year!
Petrotal – wrong -50%!
Petrotal is an oil and gas company which own the producng Bretana oil feed in Peru and is probably the worst performing call I made last year. Not only did the oil price collapse, Petrotal had a massive liability – they’d sold oil and received a prepayment with no hedging. When the oil price collapsed Petrotal were left with a contingent liability. Luckily for PetroTal their counter party Petroperu allowed them to enter a three year arrangement to pay back the liability.
PetroTal’s been working hard to minimise pipeline risk and recent steps such as the ability to sell via export routes has helped the share price get off the floor:
AfriTin Mining – wrong -17%!
AfriTin is an AIM listed mining company own a world class tin resource in Namibia. I covered AfriTin for cube back in June. I’m still not overly impressed by the company’s delivery schedule however more positively they (finally!) announced phase 1 ramp up was complete.
I still like AfriTin’s project and hope that they can begin unlock more of the value in the ground this year.
Resolute Mining – wrong -20%!
Resolute is an African focused gold producer. If a gold miner can’t even get their share price up in gold bull market you know there’s something wrong! Resolute Mining is a company which is very big on PR and IR and not great at delivering shareholder value hence my description that the company’s ethos was to “mine gold, destroy value” in my most recent coverage.
(source: london stock exchange)
Arc Minerals – correct +46%
Arc Minerals is an AIM listed exploration company with (primarily) copper exploration assets in Zambia. Arc made decent progress with the drill bit albeit at a significantly slower pace than I’d hoped. Arc managed to For me, the most significant pieces of news were that Anglo American had signed a 6 month exclusivity agreement and that they had completed a technical review and were in the process of completing due diligence in respect of the holding companies. Perhaps 2021 will (finally!) be the year where Arc shareholders are rewarded – many have been extremely patient.
Strategic Minerals – wrong -24%!
Strategic Minerals is an AIM listed mining company with assets in the United States, Cornwall & Australia. Strategic Minerals had many of the characteristics I liked aligned directors high quality assets. Unfortunately the company needed to raise money, the market knew it and the company ultimately failed to raise at a compelling price. I’m extremely uninspired with the company’s understanding of market mechanics. However I don’t think sentiment could get much lower for Strategic Minerals – every dog has it’s day…
Salt Lake Potash – wrong -37%
Salt Lake Potash is an ASX/AIM listed company rapidly developing a Salt Lake Potash project in Western Australia. Salt Lake it probably the company I was most disappointed with during 2020, I recently covered the company for cube here.
Mkango Resources – correct +115%
Mkango Resources owns 51% of a globally significant Rare Earth Elements project in Malawi. They’re in the process of completing the world’s slowest bankable feasibility study (BFS) I’ve ever seen. Despite this with rare earth’s prices exploding and the BFS becoming due in the next 6 months the shares have started to gain interest.
What would an equal weighted portfolio of last years stocks looked like I hear you ask:
I would suggest that 11% isn’t a bad result given that this would involve absolute zero trading and resources stocks by their nature are more volatile than other stocks. The above basked of shares also significantly outperformed the FTSE 100 – although it slightly unperformed the S&P500.
My net wealth increased by 115% during last year – not bad considering how things looked in the spring! My ultimate goals is still financial freedom a few more years of decent performance and I might finally be in a position to focus on investments full time.
Fingers crossed 2021 brings more upward volatility rather than downward!