PDAC Stock Pics!

I went to the Prospectors and Developers Association of Canada (PDAC) convention in Toronto in early June. The convention was very busy, and there were many good companies on offer - many of them clearly grabbed all the cash they could while money was cheap. Good for them.

I found a number of companies that meet the requirements that I laid out for for stock picking at the convention. Here are the requirements:

Money 

These are small exploration companies - without money, they are dead. The companies that I pick therefore have to have enough money to meet their stated strategic objectives. One of my pics does not...I'll tell you why I'll be buying some of their shares later in the summer.

Geography

I will not invest in companies that are exploring in places like the Democratic Republic of the Congo or Kenya. I have been burned on investments in countries like those far too often. Until they clean up their act, they will not see a penny of mine - as if anyone in these places cares about my investments! For me to invest, the country where the exploration is taking place must have a stellar reputation. All of the companies below are exploring in Canada.

Drilling

Many small exploration companies go on and on about their intentions to drill some day, or about great past drill results. Good for them, but explorers need to explore! Unless the companies have an actual active or immediately pending drill program, they don't pass my test.

Shares

I don't like companies that have more than 100 million shares out because good news has to claw through too many shares in order for the share price to appreciate enough to matter. This is the weakest indicator - if a company meets the other tests and has even 200 million shares out, I may buy if the drilling looks good enough and they have loads of cash. In fact, some of my pics do have above 100 million shares out. 

Gold!

I only invest in Gold explorers that are looking for Gold where there is Gold! This may sounds nuts, but I won't invest in companies that are not exploring near old Gold mines or old Gold finds. where they are virtually guaranteed to find Gold. Some of my pics are drilling near, not old mines or proven ore bodies, but near their own previous Gold finds, which works for me.

The list...company names with stock symbols.

TRU Precious Metals Corp - TRU.V

Delta Resources - DLTA.V

Troilus - TLG.TSX (Possible Buy-Out Target)

Galway Metals - GWM.V

Banyan Gold Corp - BYN.V

Cassiar Gold - GLDC.V (This company has a mill that generates revenue to pay for drilling)

Moneta Gold - ME.TSX (Possible Buy-Out Target)

Northstar Gold Corp - NSG.CSE 

Sixty North Gold - SXTY.CSE 

This last company does not meet the tests. It is planning to have a mill and mine up and running in 2023, processing up to 100 tonnes of ore a day. They have a permit. 

What they don't have is money - a search of their financials shows that they have a whopping $51,000!  Their stock is trading at $0,04 a share! 

This is a huge long shot, but if they get cash and do what they plan to do, assuming even 0.75 ounces per tonne (consistent with ore in other mines in the area), at 100 tonnes per day they will be producing 7.5 ounces a day meaning a revenue of about $13,500 a day at today's Gold prices. That is $4 million in revenue per year, if we assume 300 days of operations per year. I think this works out to $0.45 a share with a PE of 30, if you assume 60% of their revenue is profit. A ten bagger! I'll buy a couple of hundred dollars worth of this stock...there is a reason why this is called "gambling".

DUE YOUR OWN DUE DILIGENCE! WE (ME) SEEK SAFE HARBOUR!