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GirlsUnder30 (97.28)

How a 'delist' made the "A" List

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October 11, 2013 – Comments (0) | RELATED TICKERS: CLGRF , GTAT

I've been fairly quiet lately but time to speak up about another awesome opportunity and it comes in the form of a tiny miner in Canada called Claude Resources (emphasis on the 'au'), symbol CGR and soon to be delisted and available only on the Toronto Exchange after the 30th of this month. This is the correct move for management because the typical volume of trading in this stock does not warrant the listing fees of a bigger board. Some fortunate institutions picked up a whopping 5 million shares of this stock yesterday and volume was approximately 10 ten times its normal average. Why do I like this stock so much?

1. It's in a depressed sector, all the miners are currently out of favor for fear of disinflation and a general commodity price collapse. I am of the very strong opinion that this will not happen.

2. It's cash flow positive with gold over $1200/ounce and they won't have liquidity issues if gold stays above this level. In the event gold does fall below this level, there is a major Canadian bank squarely in this company's corner that will come to the rescue and liquidate it at better than 5x it's current valuation.

3. This company has immense land holdings and proven reserves with extraction grades that all miners would be interested in owning and its recent efforts have dropped its production cost >35%! Value investors should note that I estimate the real asset value of this company over $2/share so the risk reward here is one of the best I know of, period.

4. The delisting will create scarcity from poor trading liquidity so future upside earnings surprises will likely jump this stock in huge steps so don't expect any gradual technical signals to guide you, this is strictly a value play based on the underlying fundamentals. I don't believe the scarcity will work the same way on the downside, but I've set up purchase triggers to accumulate more should this happen.

5. I am even more excited about this opportunity than I was when GTAT went under $3. This one is a must in your portfolio as a hedge in the event the economy moves either way.

 

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