slightly off topic....and not for the traders as they really dont give a rats.....but has occupied a lot of my research over many trading years - we've all done it, experiencing it right now just holding this stock....
so - how does one pick the two green spots on any resource stock?? the below is Syrah's chart for reference:
1. those pre-2011 years are DEAD MONEY years. capital is likely diluted via endless cap raises, endless exploration black holes and many over promises..... etc.
2. late 2011/early 2012 was pre-boom golden egg period! shortest opportunity cost time period pre-euphoric rally
3. 2013-2018: "finding their feet" years. Hype, latest fad, kicking goals & momentum etc drives the SP well beyond stage development "fundamental value" and "end game" valuation kicks in way earlier than it should. Buyer beware zone.....boom bust is assured in these make or break years (KLL, E25 are mere recent examples)
4. 2019: realty sets in. no mine follows the PFS handbook. PFS go out the window the second theyre produced. materials are cyclical - you catch the perfect storm and the mkt will purge you fast.....stages 1-? never happens on time or on cost and many early years are littered with losses and capex overruns+ funding/debt issues. SP dives accordingly as mkt losses interest and other fads appear with better temporary "odds" etc
5. post 2021. hard slog is done, mine is fully operational, all stages complete, a decade has passed, commodity worth more than pfs due to natural inflation and all capital dilution is done n dusted. fundamentals of PFS kick in - growth stage where true value is generated and shareholders exponentially rewarded.
Chart above is one of 1000 ive tracked over my lifetime. Fortescue, Lynas, Syrah, E25 (almost mirrors the boom bust above), KLL (going through it now) etc.
QUESTION IS - THEY ALL HAVE A COMMON DENOMINATOR. HOW BEST TO NOT SIT IDLE IN THE PRE-2011 YEARS (are we there now for BKT?), and how to spot the two sweet spots in green. happens to all the miners, rarely an exception.....there must be a common catalyst that drives the first surge (what hurdle was met, what catalyst achieved to trigger that first surge?), a grace period in between (the premature boom), exit pre reality check and that final "2020" interval is where the true re-rate occurs. Like Fortescue, it had many boom bust, but eventually when they kicked into gear (last the test of time, pass all production hurdles) they then tend to go up to NPV full valuation and beyond as commodity prices tick upwards+cashflow/profitability generation creating incremental alpha for SH (thank you money creation)....
fortescue itself:
a decade of go nowhere pre-2004. 2006-2014 "development years" hit n miss. true steady state post 2015 or 2018 (IO boom helped)
another example:
another decade of opportunity cost lost, followed by hyped boom, operational hiccups and stage dev resets reality to 2022 and now......stage 3 to come - I dont think theyre anywhere near long state yet (still boom bust interval - DYOR)
just verbalizing my thoughts, apologies for the waffle, but if any1 has ever generated a thesis behind the timing of this, hurdles to pass, etc. keen to hear it. have many on watch that I just wont commit to (dont want dead money sitting idle esp at current interest rates), seen some shoot the lights out, but seen just as many sit idle and do nothing for half a decade or more. when to commit is an art - but surely there are lessons to learn from those that hit success - any takers on a theory??
