I was trading in and out of SBM from somewhere in the 25-30 cents downwards (as far as I can now remember), generally not losing anything much except for once when I waited to0 long - I was looking for a bottom. The purchase of around 1,000,000 shares by Innes Scott, a Director, at a low price was a bit of a tipping point for me in that it indicated an insider also had a lot of fair in the asset. I think she bought for 13 cents? The quarterly reports were comprehensive and I spoke several times with the company so I understood what was happening.
I finally bought back in at 9 cents but when I posted again I did not immediately change my disclosure to "Held" because I was beginning to feel rather stupid by the intensity of the situation (our goldies were tanking very badly in late 2014 due to was massive selling by fundies in the face of a falling USD POG and a high AUD. December 2014 was the low in the price of Oz goldie producers. I had been in cash from August/September after coming to a decision to buy back in for a trade late that year. Two or three analysts were encouraging the buying of goldies in late 2014, including Elliott Wave International (previously they had been bearish, and are somewhat bearish again).
The lowest I can recall seeing SBM at was 7 cents - there was a heap of dumping in the 7 cent range. I was seriously thinking of doubling up or more, but I had taken a fair few hits on my goldies since April 2011 and seeing the shares drop another 22% from my entry made me think that I could be wrong about SBM. At that time I was warned off buying goldies by someone who I unfortunately took notice off and did not buy more SBM and other goldies to the extent that I had planned - I bought more goldies in early 2015. It really irks me that I did not fully execute my plan as I was planning to buy EVN at 43 cents, among others at their lows.
Well done on your SAR trades. I did not understand the geology of SAR so I avoided them but I made money on a heap of other shares (it was a very easy time) - RSG took a lot longer to deliver (I sold out at several points, and came back at 24 cents in 2016 for its major run - from memory).
I know some people think that SBM was a no-brainer, but perhaps it was not. Firstly we did not know that the AUD POG would take off making the huge loan far less of a burden, input costs would fall, that they would fix Simberi after all the losses there and it was simply fortuitous that the loss making Gold Ridge mine had a weather event that closed it down earlier in 2014. The other thing to consider is that there may have been some conditions of the USD250m notes and USD75m Red Kite loan that were being breached by SBM, eg debt to cash ratio, market capitalisation of SBM. I recall Bob Vassie making a comment that SBM came closer to going under than what people realised at the time. There was talk of the Note holders taking over the company, and PIMCO had bought up a lot of the Notes on the cheap.
SBM was one of a kind, perhaps MOY, SAR and RSG come closet to what it delivered in returns. RMS has also done well for those buying at the lows. Two things that stand out about SBM is that it restructured with its existing team, except for its CEO who came in and helped with the Simberi turnaround (management took responsibility for its bad decision in acquiring ALD and fell on their swords in a dignified way), and that they did not dilute shareholders.
Peter Hall of Hunter Hall may seem brilliant in his decision to buy millions of SBM shares on the cheap - I think they got to around 15% of the company. However he admitted that this was because he had previously invested in them and had a good understanding of their situation. His subsequent decisions in buying other goldies such as DRM, BLK, and BDR did not turn out well and HH lost money on all of them when they existed. So I would be wary of simply following a well known fundie into a company unless one understood the investment thesis. I saw a specialist resource fundie buy into AMX and GRY and lose a heap of money after 2012 - they kept averaging down and owned a significant share of AMX and GRY.
BDR is comparable to BLK. Both have issues in high mining costs and both are using MACA, and their management stink to various extent. Both of them have had major share dilutions since commencing mining and are in trouble with debt. I have not totally given up on BDR (or BLK for that matter) because I would like to see what they can achieve if another group undertakes the mining. I do not think that the strip ratio is too high for a profitable mine given the reported 1.7g/t ore grade contained in the reserves. We will see next month how their mining went during the wet season. As I said previously I think there could be a lot more share dilution once BDR is listed on the TSXV so BDR is simply a small gamble for me.
loki
BDR Price at posting:
8.5¢ Sentiment: None Disclosure: Held
