Friday File: Royalties, Scams, Buffett, and Gold

A hodgepodge of updates on the Real Money Portfolio and other stories of interest -- including thoughts on Alphabet, Berkshire, Boston Omaha, Cameco, Equinox, Franco-Nevada, Ligand, Momo, Okta, Omega Healthcare, Sandstorm and more...

By Travis Johnson, Stock Gumshoe, March 9, 2018

So… what’s been happening to the Real Money Portfolio stocks this week? What else caught my eye? No transactions this week, but plenty of stuff to think about…

Clean TeQ Holdings (CLQ.AX, CLQ.TO, CTEQF) announced a somewhat surprising equity raise a couple days ago. It seems inspired largely by urgency — they can’t really claim the bulk of their debt financing until the bankable feasibility study is done, but raising $100 million or so now lets them make some progress on developing (“accelerating the development of,” they say) the Sunrise Project. They think this can potentially “fast track” development and speed things up by a year, though I’d take that with some skepticism given that the feasibility study won’t be out until close to midyear.

It doesn’t change the story much, though, and didn’t really impact the share price — this is still one of the more appealing near-term cobalt producers outside of the Democratic Republic of the Congo, and the stock will be volatile as we await the feasibility study, the actual construction financing commitment that should follow that, and the actual formal beginning of the construction process (though, frankly, construction is really underway already). I like that they’re pushing the schedule, and “raise money when you can” is almost always a good long-term idea for mining companies… even if it doesn’t do much good to the share price in the short term. The offering price was at a modest discount to the market price (about 6%), as is fairly typical, and the knee-jerk reaction is usually to bring the stock price down to that offering price or below in the wake of the offering… hasn’t happened yet, perhaps because the offering was oversubscribed and the institutions were happy to put more cash in. The equity raise presentation is here, I have been nibbling at these shares here and there in the past few months and may add a little more if it seems appealingly priced as we head into the feasibility study, but my position is big enough for my taste at the moment at about 1% of the Real Money Portfolio, so I’m likely to mostly wait it out from here. Despite my admiration for the company and their success to this point, I have to remind myself that Clean TeQ is effectively a junior miner trying to develop a single project — which ...

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