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17th Nov '20 by mohammedburhan1

4 comments 586 reads

I recently bought £3K shares in £MTL Stockopedia super stock rating.Since buying stock has lost its 20% value.Wondering any advice on selling it or wait

Thanks in advance

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Mohammedburhan1

Premium Member

4 comments

Macro

17th Nov '20

Mohammed,

The stock is very small: £38M market cap. The Bid-Offer Spread is about 3% but averages around 8%. The volatility on the stock is >200%. They seem to have one investment - a gold mining prospect in the Phillipines. ... So I was reading this hoping that your position size is small!

Generally with Gold mines I try to ensure that I have diversification. This can be through (a) an ETF with a variety of holdings [an investment trust], (b) a royalties company that has lent money to producers in exchange for off-take agreements at a specified future gold price (c) financiers who lend money for either equity or a mix of equity and royalties.

Some examples:

- ETFs: GDX, GDXJ

- ITs: BRWM, BSRT (have a look at MTL shareholders list)

- Royalties Companies: FNV, WPM, RGLD

- Financiers: SII

Exploration companies are at the very high risk, very high reward end of the spectrum of possible vehicles. Normally these sorts of bets work within a portfolio of such bets.

However, your gold mining prospect seems to have made it through the maze of exploration risk into production! Well done! A small stock like this is going to be news driven, so expect sudden moves up and down with company press releases, earnings dates and moves in the gold price and US dollar. Looks interesting ... but sporty!

Snowbum

18th Nov '20

Hi Mohammed,

I am not adverse to taking positions in small cap miners myself and have had some really good ones and some really bad ones over the years. I've found better results when focusing on several key factors with explorers/developers: Resource (scale & depth), it's location & jurisdiction; state of local infrastructure; management (experience/credentials & skin in the game).

From a chart only trading perspective, I'd be looking for the current price level to hold with a bounce higher being far preferable. If this area is breached it may fall back to the 1.3p support level.

https://www.tradingview.com/x/...

The advice offered above by Macro is excellent so I guess it's down to how you view the outlook for this trade/investment.

Hope it works out for you,

Forbsy.

piotrmanczak

2nd Aug '21

Metals Exploration - Q2 challenges but a better outlook considers HotStockRockets

Gold producer in the Philippines, Metals Exploration (MTL) has announced quarterly results, including noting production challenges but also that it believes it is well placed for the second half of the year.

The challenges included reliability issues with the company's equipment fleet and delays in sourcing certain essential replacement parts and not having full access to certain areas. However, it still delivered 16,591 gold ounces in the quarter and $5.5 million free cash flow (average realised gold price $1,807 per ounce), with net debt reduced by $1.7 million to $111 million.

We previously noted clear risks but also clear opportunity and that looks to remain, including with equipment investment and continuing to work with the local authorities to complete the process of removal and resettlement. Those offer some confidence of a re-acceleration of free cash flow.

There was $11.5 million in the first quarter - to make the current market cap of £30 million, with the shares at 1.45p, look cheap. As noted on recommendation earlier this year, we reckon that this is a well over 6 years mine and that the 3.25p share price reached in October is realistic. Therefore, a risk/reward buy.

From Tom Winnifrith

William K

2nd Aug '21

Interesting one. Macro's reply is good. This is the kind of stock I sometimes dabble with on the basis that the reward might be huge. My initial investment is always small - max 1% of my portfolio - on the basis that I might lose the whole lot. And I don't bother with a stop loss because of the volatility. My advice would be to ensure that your holding isn't >2% of your portfolio (sell some if necessary) and hang on to the rest regardless of price fluctuations in the hope of a big winner.

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About the Author

Mohammedburhan1

4 comments

Metals Exploration - Q2 challenges but a better outlook considers HotStockRockets

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