Musings on Investing

Indian Gold Imports and its Dirty Secrets

My Three Favorite Zinc Companies

There is a lot of confusion in the market regarding how much gold India is importing. I explain the situation in a speech I recently gave at the Mining Investment Asia conference in Singapore:

On investments…

There is a lot of interest in the market in zinc.

People often invest in companies for the leverage they seem to offer to the underlying commodities. In my view this approach is very erroneous.

In my career as an analyst, I have seen euphoria about the future of oil, uranium, REEs, graphite, lithium, vanadium, molybdenum, gold, silver, etc. None came to fruition. If you had a strong opinion about a commodity, you should have invested in that commodity, not in companies.

One should invest in a company only for the value it offers using the lower of the spot commodity prices and futures contract prices. Investing in a company for leverage to commodities almost always ends up in losses.

I have no view on the future of zinc price. I invest in companies for their underlying values. Here are my three favorite zinc companies, which in my view offer good entry points at the current share prices:

  • Fireweed Zinc (FWZ; $0.82): Brandon Macdonald, CEO, is a mining executive I have come to respect hugely. He is a rare combination of technical skills and business competencies. FWZ might be closest to production among the zinc companies I know. (Disclosure: I usually write about companies soon after my clients and I have invested. In this case, I invested before FWZ started trading. Hence my cost base is low.)
  • Callinex Mines (CNX; $0.31): I have known Max Porterfield, CEO, since my days at Frank Holmes’ US Global Investors, where Max was a key marketing executive. Max has been accumulating projects and has created a very fine team of geologists. CNX is unique in the sense that their resource base and exploration is focused on known mining camps that have processing facilities in need of new material. (Disclosure: I am listed as a Strategic Advisor to CNX. This is on a friendly basis, and is unpaid. They might buy me a dinner once in a while.)
  • Adventus Zinc Corporation (ADZN; $0.70): This is a spin-off from Altius and run by Christian Kargl-Simard, who is one of the most knowledgeable and well-connected persons in the mining industry. I see this company becoming a land-bank of zinc projects.

Finally, have you booked your ticket for the next Capitalism & Morality seminar, which promises to be an absolutely amazing day?

Warm regards,

Jayant Bhandari

Associate: Rajni Bala



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