Every stock investment has an associated risk and reward. On the risk side, the question becomes an analysis of the probability and magnitude of the possible downside.
I often buy stocks where I perceive the longterm exposure to be modest in comparison to the potential upside.
I have frequently written on my Twitter stream, and here, on Generation Mining, a palladium and copper development mine with a tremendous resource, an "abundance of infrastructure," (to quote a positive BMO report) and an excellent executive team. I think Generation Mining is the new green, given its metal portfolio, its ESG sensitivity, and suggestively, the amount of money this project will make its investors.
I am not going to repeat the logic of this investment, which can perhaps be quickly discerned from what I have written, and certainly from the company's website and very clear, exciting, objective, presentation decks.
But this is what I will do: The stock is currently trading at $.686 US per share, with 170,000,000 fully diluted shares outstanding. That is a total market cap of $116,000,000. Not a lot with a feasibility study done; a labor understanding in place with the First Nations; an open pit plan that can be in production in a few years; a great team and infrastructure; a 13 year mine life with massive palladium and copper reserves; and an IRR near 50% at spot metal prices, translating into a $1 - 2 billion NPV.
My view? Sure building out a mine has permitting, construction and other uncertainty. But news flash! The resource IS THERE and to me, within this price range, the downside is relatively defined, yet the upside is as wide open as the beckoning blue skies to a rocket on its pad.
Yes, Generation Is The New Green!