Musings on Investing

Don’t be Fooled

Gold Mountain

When a company in its presentation devotes too many slides on the commodity market, I start to go skeptical. Such companies have no idea why commodities are called “commodities.” When they project a future of scarcity, they show a lack of understanding of economics: About elasticity of demand and supply and how the futures market takes care of shortages. More importantly, too much talk about commodities is diversionary if companies have no project of substance.

A few years back, I wrote the linked article on why investors should not risk their capital by speculating on commodities.

These days, some companies have decided to talk too much about their ESG and increasingly EDI programs. Of course, only the acronyms are quoted, for every “woke” person should know what they mean. ESG stands for Environment, Social, and Government. EDI stands for Equality, Diversity, and Inclusion (which in real life means bigotry of low expectations). The true believers make these hollow concepts sound like the end of history. When I see too much of ESG/EDI in a company’s presentation, I move on without wasting any more of my time.

On Investments

Gold Mountain (GMTN; C$1.15) is a new company. I have followed their Elk project for fifteen years. A few years back, a client of mine wanted to buy this project, something that didn’t work out. The project offers solid economics. The earlier companies that owned it missed the underground potential of the project. None moved it to production. At the current share price, I see an easy 50% upside based on what is known. If they find an underground potential, that is a free upside.

They recently closed a large private placement at C$0.97. Each warrant has an exercise price of C$1.25. I would be looking for a weakness to accumulate GMTN.

Jayant Bhandari

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