Technical analyst Clive Maund explains why he thinks Giant Mining Corp. is an immediate speculative buy.
If you are the type of investor who likes to achieve maximum leverage on capital employed in an environment where risk is at tolerable levels, Giant Mining Corp. (BFG:CSE; BFGFF:OTC; YW5:FWB) is the stock for you.
In its former incarnation as Majuba Hill Copper, the only giant elements of the company were the potential of its Majuba Hill resources, which continue, and the scale of losses suffered by shareholders. However, with the company's rebirth earlier this month, involving a name change and a significant 1:20 stock decline, a successful oversubscribed financing and the prospect of a massive copper bull market already underway, it is considered there is a very good chance that the company and its shares will live up to the new name.
It is very important to note that there are two driving factors currently that make the stock exceptionally attractive. The first is that it is at an extremely low price historically, as we will see later on its charts. The other is that, following the restoration of the sharing, there are only 3.4 million shares outstanding, of which less than 2 million are outstanding, thus, any tilt in the balance between supply and demand will result in large gains in the stock.
We'll now look at a set of slides from the company's latest investor filing, which help tell the story.
We'll first start with a few slides about copper itself, which explains why it is such a central metal and why it will be rare in the future and therefore its price will increase significantly.
The first slide shows who uses and how much copper: Chinese consumption is staggering, gobbling up 57% of global supply this year.
The next slide, which is not from the company, shows the massive copper supply deficit that will begin to be felt as early as next year and is expected to steadily worsen, as well as the explosion of mergers and acquisitions (Mergers and Acquisitions). activity last year after a decade of cuts in copper exploration.
The next slide shows the location of the company's flagship property in northwest Nevada, located between the famous Battle Mountain and Walker Lane trends, and also gives some details about it.
The next slide gives a view of what is presumably Majuba Hill, which provides the name of the company's property and formerly the name of the company itself.
If there are any hikers among you who would like to climb this hill, it is advisable to do so before they are transported in 100-ton trucks.
The next slide provides an overview of the history of Majuba Hill, where high-grade underground mines were located.
This is not only of academic interest as it clearly shows the potential of the region when subjected to more modern and efficient mining techniques.
The company's plans for the property are not the product of a “pipe dream” or wishful thinking.
The next side showing the 2023 NI43-101 assessment demonstrates that there is economically viable copper in this hill – and that at today's prices.
The final slide shows the extraordinarily low number of shares outstanding following the consolidation, at 3.4 million, which obviously creates potential for significant gains if demand surges.
We will now look at Giant Mining's stock charts, where we see that it appears to be reversing upward from an extremely low level against the backdrop of a constellation of markedly improving fundamentals, both for the company and for the metal sought, namely copper, as stated above.
We'll start by looking at the long-term charts to get an overall understanding of the stock's history, then zoom in on the milestones.
Starting with a 7-year chart, we can see that the stock has suffered a horrendous decline from its 2018 high, although it's worth noting that it has never risen above $2,700 – that price is adjusted for subsequent setbacks. What this chart clearly shows, even taking this into account, is that the stock is now worth nothing compared to its former glories.
Even if we eliminate the wild peak of 2018 by going back only to 2020 using a 4-year chart, the decline from the adjusted restoration peak of early 2021 at around $142 to today is still horrible, with its lofty heights crushing the recent action flat. the graphic, making it unintelligible.
On the positive side, the advantage of this low level is giant, with a strong accumulation of volume this month. We We can start to see a sign on this chart that it could reverse higher.
Zooming in again via the 1-year chart, we see that even over the last 10 months, Giant Mining lost 95% of its value from its peak last August until the beginning of this month, but on this chart , we can start to see the positive price/volume action of recent weeks which is finally the sign of a reversal.
The drop to what appears to be the final low earlier this month occurred on relatively very heavy volume, and it looks like a “sell high point”, the price has since stabilized thanks to the improvement volume on the rise, resulting in a resumption of the accumulation line, which is considered a fairly convincing sign that the bottom has been reached. So we'll now look at the recent action in much more detail on a 3-month chart in an attempt to discern exactly what's going on.
The 3-month chart shows recent actions so we can easily see what's happening. On this one we can see that the price model from late last month is a small cup and handle base, although it looks more like one of those little plastic spoons that you use to measure doses of powdered medications.
As mentioned above, the dive to the low occurred on relatively large volume which is believed to be due to a “cross trade”, and cross trades in this position are usually due to Smart Money taking advantage of very high prices. low to establish a large position in a low-priced stock. The price then came out of the low on fairly good volume, which then became very light to non-existent again, with the price settling into a very narrow range to form the handle of the pattern. Price is still within this handle, and increased activity when price rose slightly on Friday can marks the start of a breakout from the base pattern.
Giant Mining currently has three major goals, which are positive circumstances that have all occurred in the recent past. One is that it just closed an oversubscribed financing, another is that it is about to begin a major drilling program that should generate interest in the stock and could yield positive results, and finally and above all, copper has just started a major rise. market facing an imminent and massive supply crisis.
The ideal time to show up to a party is right after others have spent hours preparing for it, and you arrive just as it starts. This is believed to be the situation we currently find ourselves in with Giant Mining.
Giant Mining is therefore classified as an immediate speculative buy for all time periods. It should be called speculative because it is a small company whose shares are very cheaply priced, but also offers massive leverage if things go well, as is expected. Due to the extraordinarily low number of shares outstanding (less than 2 million in the float), it is advisable not to release this amount until you have made the desired purchases.
Giant Mining Corp. website.
Giant Mining Corp. (BFG:CSE; BFGFF:OTC; YW5:FWB) closed at CA$0.495 on May 3, 2024.
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Important Disclosures:
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their households) own securities of Giant Mining Corp.
- Clive Maund: I determined which companies would be included in this article based on my research and understanding of the industry.
- The statements and opinions expressed are those of the author and not of Streetwise Reports, Street Smart or their principals. The author is entirely responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or distribute this article. Streetwise Reports requires contributing authors to disclose any ownership or economic relationships with the companies they write about. Full author disclosures can be found below. Streetwise Reports relies on authors to provide this information accurately and Streetwise Reports has no way of verifying its accuracy.
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Clivemaund.com Disclosures
The above represents the opinion and analysis of Mr. Maund, based on data available to him at the time of writing. Mr. Maund's opinions are his own and do not constitute a recommendation or offer to buy or sell any security. Because trading and investing in any financial market may involve significant risk of loss, Mr. Maund recommends that you consult a qualified investment advisor, licensed by the appropriate regulatory bodies in your jurisdiction, and make your own due diligence and your own research when making any kind of transactions. of a transaction with financial consequences. Although qualified and experienced securities analyst, Clive Maund is not a registered securities advisor. Therefore, Mr. Maund's opinions on the market and stocks should not be construed solely as a recommendation or solicitation to buy and sell securities.