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My Basket of Lotto Ticket Exploration Miner Plays

I have never been one to play the Lottery as I believe the chances of winning are about the same as being struck by lightning. I reside in Southern California as well so the chances for me would be even slimmer!

However, I do like the odds of a different kind of lottery that I believe has much better odds of success if you have the three things it takes to be successful at it. The three essential requirements are research skills, proper timing, and a lot of patience. This game is played with an equal monetary investment in a basket of eight to ten high risk micro-cap exploration mining juniors. For my taste, I do not allocate any more than 20% of my miner portfolio into this basket.

Each company has to meet my very strict criteria as this helps weed out the weak players and increases the odds of success. I liken the success rate to be that of a professional baseball player. If you are successful with just 3 out of 10 you are able to compete in the major leagues and make the big bucks!

Here is my criteria list that each company must possess before I include them:

  1. Management must have past success and at least 5% ownership.
  2. Enough cash for at least a year with no debt.
  3. A tight share structure of less than 150 million shares outstanding (The fewer the better!).
  4. Respected Mid-Tier or Major miner and/or respected fund ownership.
  5. Property with elephant size deposit potential.
  6. Permits and secured ownership of deposit(s) in place.
  7. Infrastructure at or very near the deposit(s).
  8. A good address near previously discovered proven large discoveries.     

This list would probably only apply to just 10% to 20% of the entire junior miner exploration market so proper due diligence is the key to being successful at this strategy.

The ultimate goal of this investment plan is for a Major or Mid-Tier miner to take out each company at a premium. If, or when, this happens I will sell the position and bank the profit depending on the valuation of the take over company. If I believe the company has growth potential, then I will bank the profit and let my original investment grow with the company until I believe this miner bull cycle has ended.

Here is my list of eight junior miners in which I have taken full positions and believe have 5-10x gain potential from my entry points. I have included the company’s most recent presentation as well.

Defiance Silver Corp:  https://www.defiancesilver.com/assets/docs/presentations/def-presentation-august-2016-20160829113121.pdf

Mirasol Resources: http://www.mirasolresources.com/i/pdf/MirasolCorporateUpdate_WEB_July2016.pdf

TerraX Minerals: http://www.terraxminerals.com/i/pdf/presentation.pdf

Mundoro Capitol: http://mundoro.com/corporate-presentation

Brixton Metals: http://brixtonmetals.com/cn/wp-content/uploads/2013/08/Brixton-Presentation-A2016.pdf

Colorado Resources: http://www.coloradoresources.com/i/pdf/KSP_Inel_SprottConference.pdf

Sarama Resources Ltd: http://saramaresources.com/Files/LatestInvestorPresentation.aspx

Savary Gold: http://savarygold.com/images/pdf/presentations/2016/Savary_Gold_2016-07_29_compressed.pdf

I have my eye on a few more which have yet to reach the price I am willing to pay. If you have companies that you wish to share please feel free to contact me through Kitco at the email address below.

By David Erfle Contributor to Kitco News
newsfeedback@kitco.com

David Erfle is a 52 year old self-taught mining sector investor. He stumbled upon the mining sector in 2003 as he was looking to invest into a growing sector of the market. After researching the gains made from the 2001 bottom in the tiny gold and silver sector he became fascinated with this niche market. So much so that in 2005 he decided to sell his home and invest the entire proceeds from the sale into junior mining companies. When his account had tripled by September, 2007, he decided to quit his job as the Telecommunications Equipment Buyer at UCLA and make investing in this sector his full time job. He personally survived two bear markets, witnessed incredible sector changes and had to alter his investment philosophy numerous times in order to adapt to changing market conditions."

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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