2 beaten up resource stocks that present big opportunity ahead.
The biggest opportunities and gains can often be found as stocks reach their cycle bottoms and when the pendulum swings back the other way.
Southern Silver - Market Cap $36 Million Canadian
Above is the weekly chart going back to 2016, Southern Silver is now at it’s March 2020 Covid lows. We are near the cycle bottom at these prices and this would be a great level to build a position or add to one if you have conviction in the sector and stock.
Southern Silver is a silver developer with a huge resource and is currently in the process of updating it’s existing PEA. It’s currently valued at 10 cents an ounce. Talk about a cheap valuation.
Based on the 2022 PEA which is set to be improved upon in the coming weeks. The project has an after tax NPV5% of $472 Million Canadian at $22 Silver. Even at the current silver price this is trading at a massive discount. When you input $25 silver the project has an after tax NPV5% of $750 Million Canadian. Talk about big leverage to the silver price.
Critical Elements Lithium - Market Cap $144 Million Canadian
Lithium stocks were on fire in 2023, but they have gone down as quickly as they went up. I personally think there will be more downside ahead in 2024 and it could take years before these take off again, but the payout could be worth it for the patient investor.
Critical Elements is a later stage developer that I am currently monitoring, I will start to slowly scale in once my price target is hit. The stock was over 3.00 in 2023 and is currently down to .66 cents. I believe there is likely to be much more downside ahead.
The company has the mining permits needed already which is a time consuming venture in Canada. They were granted their mining license in September. A construction decision is looming and financing will need to occur. This might be a tough thing to do in the current environment.
The economics looks amazing above, but the company used lithium prices that are multiples higher than what the current market price is. They used technical grade spodumene prices of $4700 USD/t, prices have since plummeted down to around $1000USD/t.
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