Nevsun Resources (NSU.TO)

(A Top Pick Aug 11/15. Up 13.08%.) He likes this a lot. They had $400 million in cash, and the risk was that they would do something stupid with the money. But, they bought Reservoir Minerals. Thinks there is a runway for 2-3 years of gains. It pays a 5% dividend while you wait.

A copper/zinc miner in Eritrea. This has done absolutely nothing. It looks like dead money to him.

(Market Call Minute) A copper mine turning into a zinc phase. They went out and bought another asset in Serbia. They keep paying their dividend.

They’ve really delivered with the Bisha Mine in Eritrea. Has a great balance sheet and a great income statement. The mine is coming into the zinc dominant part of the mine, just in time for a recovery in the zinc price. They took over Reservoir Minerals in Serbia, which is one of the highest grade undeveloped mineral deposits in the world. The knock on the company was always that they were going to do something stupid with all the money they made on the Bisha mine, and they answered that by doing something very smart. Their future is secured and they pay out a very nice dividend while you wait. Dividend yield of 5%.

Has a really interesting metal deposit. They’ve been mining 3 layers. Started with a layer of gold, then there was a copper layer, and now they are ending up as a zinc producer. Zinc looks like one of the few industrial metals where the supply/demand is really tight. This company looks like a good way to play that transition. They just acquired Reservoir Minerals, so there might be a little bit of noise in the short term with combining the 2 companies. The longer-term outlook for zinc is probably the most bullish in the industrial metals.

Base metals have not been a fabulous place to be and the stock declined quite sharply. Roughly 85% of the market cap of the company is in cash and 96% is in net working capital, so you are basically getting the mine for free. No debt. A very profitable, low cost mine. Right now they are producing mostly copper and some gold as a by-product for cash cost of roughly $1.30. Transitioning the mine to high grade zinc zone over the next year, and the supply/demand outlook for zinc is actually better than copper in his view. Feels a sharp relief rally will occur as tax loss selling peaks in the next few days. Dividend yield of 6.34%.

This is in an area called Eritrea that everybody hates. A $600 million market cap with $420 million working capital, which means that enterprise value is $180 million. Free cash flow generation is about $100 million a year. Selling at 2X EBITDA with at least a 10 year mine life. Dividend yield of 5.88%.

There is a theory that we will run out of zinc in a couple of years. This company currently has a copper mine in Eritrea which turns into a zinc mine in 2 years. The only problem is that you get Eritrea, and anything could happen in a country like that. This company is sitting on a ton of cash trying to find a project outside, to diversify. He is waiting on that.

(A Top Pick Jan 30/14. Up 9.13%.) In Eritrea Africa, so not the most desirable area to operate given the geopolitical climate, which has been relatively stable, but not a democracy. Loves the cash position. A company that is a cash flow generator. Had transitioned from gold into copper. Next year, with the zinc circuit coming on, it will start to become a zinc producer primarily, just in time for a recovery in zinc prices. However, they are going to have to do an M&A deal for the next leg of growth.

(A Top Pick Jan 30/14. Down 5.39%.) Sold his holdings. Wasn't suffering a bad loss, but was moving into the copper side of production. He prefers being in larger caps from a copper perspective. A great cash flow generator, with cash approaching probably 70% of its market cap. No debt. The markets’ fear is that they are going to buy something.

His company has a $5.30 target 1 year out. There is a lot of benefit to the companies in the oil patch. The energy complex is definitely strong with good earnings.

A great gold mine has become a good copper mine on its way to becoming a great zinc mine. The cash in the treasury came from operating a mine.

A new position for him. This is a little bit of a gem. In North East Africa. It was a gold producer but the new zone is copper. This is a company that has lots of cash, 3.6% dividend, cash flow, and in 2016 it transitions into zinc just as zinc starts to move up. 4x cash flow vs. peers at 6x.

(Market Call Minute) Thinks they will buy something accretive.

Base metal play. Likes that they have lots of cash and good growth in production. A small long position for him. He is neutral on gold right now.