Hey mate,Completely agree.I remember many many years ago, I was...

Hey mate,

Completely agree.

I remember many many years ago, I was chatting with the MD of a spec stock and he mentioned that it was something like 1 in 250 spec companies (referring to junior resource companies), actually ever get in to production.

I've always maintained that success in investing, particularly in the spec sector, increases exponentially with longevity. Because if you can preserve your capital and not blow your account, you'll learn the important lessons for success (unfortunately, you usually learn them by losing money).
You also learn that, unfortunately, the nature of the spec sector and it's potential for "extraordinary" returns, comes with the fact that the overwhelming majority of spec stocks are utter trash, useful for nothing more than paying the salaries of those running the companies.

These lifestyle companies, keeping activity proportional to the need for funds via CR, eventually usually get to a point of absurd dilution and issuing a share consolidation. ..... just to keep the gravy train rolling. Many folks in management are also on the boards of OTHER stocks .... often receiving 5-6 figure payments to simply attend a few board meetings and circle jerk each other, each year.
Never mind those who will regularly start up a new venture, issue themselves VERY generous founder shares and options, spend the first 6-12 months being "visibly active" to try and ensure the SP appreciates enough so that they get all of their entitlements..... only for the company to inevitably share the same fate as many of their previous endeavours.

Now I'm not saying that all management of spec stocks have "bad intentions" ... but many know how to game the system and line their pockets at the expense of shareholders ..

This is why I believe in keeping a note of any directors that you come across, that need to be avoided in the future.

Seasoned investors in the spec sector usually jump into a stock, hoping that hype and activity will bump the SP up enough for them to lock in profits, and then move on to the next stock (or come back later for round 2/3/ etc). I'm not saying you cant or shouldnt take long term positions in spec stocks (obviously I have), but taking profit along the way is essential.

When you watch how MOST lose money in spec stocks, its actually quite fascinating. I've seen people "average down" when the news is objectively bad. .... I've seen folks sitting on life changing profits, only to continue to hold and watch those profits disappear along with the hype ....
Emotion in investing leads folks to:

1. Buy more when the stock drops
2. Hold when the stock runs, often because the little Green monster on their shoulder is telling them that it's going to go higher.

It's insanity, and the exact opposite of what you should do UNLESS the stock is fundamentally undervalued.

My personal solution I developed over the years actually helped me alot. Bascially what I do, is I periodically assess my individual investments as a "cash balance". Then I ask myself the question, "If I had that amount of cash sitting in my bank account, would I invest it in stock "ABC" again" ?
I've found this a very effective way to help me cut losses on stocks.


Now to NRZ .....

The issue with us being in the spec space, is that we dont really have alot of exciting activities that can generate hype in the market.
It's basically been years of slowly ticking boxes, often with up to 6 months of no news. Combine that with the large CAPEX required to get this project off the ground ..... with the very high spend on staff etc ..... and this is where we are.
Many watching dont want to jump in yet DESPITE independant valuations of a much higher MC, pre binding offtake with Daelim.

It's become pretty clear that this stock will either secure funding and then have an extraordinarily large amount of ground to make-up, in terms of MC .... or they will inevitably get stuck in the CR,CR,CR, Consolidate, CR cycle that many other spec stocks do.
At this stage, without funding there is very little that will likely push the SP north.... so dilution will accelerate from this point.

,
BUT, as I am predicting, IF they pull off pre-FID and full funding ..... I will expect that shareholders will be richly rewarded. I've taken profit at many points along the way, but I've continued to accumulate a significant amount of heads and NRZOA options here.

Why ?

Here just 3 of the many reasons.

1. Management have jumped every hurdle in front of them. The granting of the PPL in particular was a massive moment in my eyes.
2. Daelim .... probably one of the most under looked aspects. With their board seat and being $7.5M odd in the red with their investment stake, being owed 10's of millions of dollars for their work on the BFS, they're STILL working with expectation of payment at some point. This is a massive deal.
Their reputation and funds are on the line, and they dont appear concerned in the slightest. Nevermind their binding offtake and commitment to help secure a major portion of the funding with Korean financiers.
They genuinely see NRZ as partners, and have been incredibly supportive.
3. CNE had multiple opportunities to sell their shares at a profit..... they not have sold a single share, despite now being in the red.



I have no idea how much dilution will occur on the path to funding, but this is the most confident I've ever been on a spec stock becoming a producer.



Anyway, enough of my drivel..... again


All IMO etc etc.



Cheyne