Here's how my trading has played out so far.
Jul-Aug - Built a position at prices 11-17c over the course of a month. Secretly I was kicking myself because CNB was on my radar sub 10c.
Sep - Small participation in SPP to average up to 13.8c. Protecting average to still have 100% profit at SPP price in case SP falls below.
14 Oct - Average of 13.8c.
21 Oct - Sold my SPP shares and the higher priced parcels at 53.5c/54c after the SP failed to continue the push through 60c the previous day for a combined 314% profit on that total trade. The US election getting closer was also a deciding factor to sell with the following thoughts:
Trump - Self obsessed, speaks with the vocab of an 8yr old, but good for US economy trying to bring back US jobs and intellectual property. COVID goes uncontrolled and wipes out 3-5% of the population until a vaccine is found during the next 1-2yrs, but economy keeps ticking along.
Biden - Geriatric frontman who cannot string a sentence together without reading it. Anti-Trump at all costs so shuts down US to control COVID, protecting lives, but trashes the economy.
Thoughts - US is f@#$ed either way, but Trump is better for the economy, and hence better for my stocks.
27/28 Oct - AGM notetakers state that CNB would rather sell Tick Hill then mine it (which was the feeling I got from the last few announcements). My thoughts:
Cash including incoming tailings deal of 12.5M.
Tailings deal Tick Hill Stockpile Ore Reserves of 410,900 tonnes at 1.35 g/t for 17,800 ounces sold for ~6M. $6M/17800 oz = inground gold sold at ~$337 oz
Tick Hill
Forecast Pre tax cash flows of ~$18M at AISC of A$1,190/oz -
if CNB mine it.Production Mill Feed of 63,300t @ 6.1 g/t gold for 12,500 oz
if sold at tailings deal price = $4.2M. Could be higher due to grade, but could also be lower due to mining risk/costs. Obviously if drilling either finds the the Tick Hill extension or upgrades more of the JORC resource into the Proved/Probable category, then this figure will change.
So as I see it, CNB can sell Tick Hill as it currently stands and will effectively be an explorer with ~$17M cash (12.5M cash/incoming tailings/min Tick Hill sale) with promising nearology ground to DEG with previous decent shallow drill hits and a bucket load of potential (key word). Management history is an added bonus.
I have then set the minimum value of CNB as follows with respect to market cap (MC is the important metric, SP is a component of MC).
Any basic exploration company with say $2M cash will have a MC of $5-10M. So I will assign an explorer bonus of 3M over cash position to be conservative.
SOI is extremely low at 114M. This can be a big plus or a big negative depending on the success or otherwise of drill results. For me, a 5M bonus at the moment.
Commodity cycle. Gold is riding high and with the current state of the world will probably go higher in the next year. I will give it a commodity bonus of 5M.
So my minimum CNB valuation is 17M cash + 3M explorer + 5M SOI + 5M commodity = 30M MC. Anything above this I feel is based on potential rather than reality. What value people apply to potential is an individual risk choice based on their current financial situation and also their average holding costs.
22-30 Oct - SP trades sideways in the range 47-54c. Finds good support in the high 40s several times. Legitimate Buy:Sell ratio remains favourable during this period. My criteria is as follows:
3:1 Buying pressure will push stock higher.
2:1 Buyers will have patience waiting for their price to be hit hence sideways movement within 10-15% range depending on psychological price barriers i.e every 10c mark for small caps, all time highs, TA price points.
1:1 and below equals selling pressure will drive it lower.
02 Nov - Aus Interest rates tipped to be cut again signifies economic weakness is growing. US election getting closer equals risk and uncertainty. EU going into lockdown equals economic weakness. Legitimate Buy:Sell ratio falls to 1:1. Pretty much all spec goldies get sold down. I sell the next highest parcel at 44c. I now have an overall profit on trades of 318% plus still have a parcel with an average price of 11.25c (technically free carried with profit at the current SP).
CGT debate - hold for 12 months and get a 50% reduction on tax payable on profits at your individual tax rate.
Rule 1. You have to make a profit before CGT applies.
Rule 2. No one has ever made a loss taking a profit. A reduced profit is still a profit.
Rule 3. Worry about CGT implications if you manage to get in early on a winner.
Rule 4. Worry about CGT implications in the 3 months prior to anniversary.
In the below example if you bought 100000 shares in CNB on 12 Oct at 43c and managed to sell on the 52 week high 8 days later on 20 Oct then you would have an extra 9K in your pocket after tax. Not selling for fear of CGT means that if spooked into selling today, instead of having an in hand profit of 9K in a week, you have nothing. Furthermore, you're now waiting 11months and 3 weeks for the price to return to all time highs for a potential further 3.7K. Rinse and repeat this situation a couple of times a year and those making decisions purely on CGT clearly lose.
| Number of Shares | 100000 |
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| 1 | Buy on 12/10 at 43c | 0.43 | $43,000.00 |
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| 2 | 52 week high | 0.595 | $59,500.00 |
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| 3 |
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| 4 | Profit at 52 wk high | $16,500.00 |
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| 5 |
| <12months | >12months |
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| 6 | Tax at 45% | $7,425.00 | $3,712.50 |
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| 7 | Profit at 45% | $9,075.00 | $12,787.50 |
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| 8 |
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| 9 | Profit if sold today at 43c | $0 |
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SPP - CR was at 30c. SPP participants are seeing profits diminish which increases downward SP pressure.
At the end of the day, your holding price and risk appetite determines whether you hold hold or bail in these conditions. Those that bought in at the 52 week low are laughing all the way to the bank and have a different set of considerations to those that bought at the 52 week high and are sitting on pretty hefty loses.
For me - I have now booked a profit and am free carrying the remainder. If the SP gets hammered to shell value due to Rona/US/?? I've still made a great profit. If CNB hit some sort of ridiculously high AC results, then I can either let my holding ride or happily buy in at 60c on the day of the announcement and I'll still have have a much lower average for protection whilst riding to the next high.
It's all relative to your circumstances so ignore the HC noise. Work out what your cheap/fair/high valuations are for a particular company and run your strategy relative to your risk profile.
(20min delay)