I'm starting this thread for more of a central thread, to keep all my notes in one place.
By making them public. I'm saying to myself that I truly believe in what I'm saying and have conviction in my thought process and research. Otherwise, I'm just telling myself what I want to hear if I don't commit.
By making this thread....I open myself up to future criticism IF I'm wrong (And we know you’ll be VERY critical of my notes, if I'm wrong.)
I’ve fallen in love with bagger hunting.
It’s become a bit of an addiction and the more success I have, the more I want.
With my top down approach. I look at the sector. Throw every stock on a spreadsheet and just plow throw all the data. Read every ASX release, broker report. Google, once the list is smaller, I speak to management, investors, experts in the field etc. Then check out everything the directors and management every did, good or bad.
If little Bobby pushed Cindy off the swing when he was 5, I want to know about it.
I believe investing in Li stocks because I think Lithium will be in very STRONG demand over the next 5+ years.
The Chinese aren't going to stop building EV's (Cars, buses) and batteries anytime soon.
They are going to build millions and millions of EV for the next 30 years and beyond.
IMO...This is a FACT.
With Lithium there are over 100+ stocks on the ASX...more around the world.
It's not easy sorting through the fluff and crap on ASX small and micro cap stocks.
We all know and see the professional CEO's/directors milking investors over and over with dead projects.
(Thanks to Google, it's getting harder for them to hide.)
For me as an investor I want to buy HIGH risk/reward ratio stocks so the lower the MC, the better.
GXY, PLS, ORE and others are higher quality. They'll do well.
However, look at them 5 years ago. I wish I bought them then.
I'm after a 30-50 bagger (NOT 2-5 baggers) and LOW MC stocks are the ONLY way to do it.
DMI is the only 30+ bagger stock I can see on the ASX right now IMO!
I'm going to list the reasons why below and in the following weeks...I'm going to go into each reason in more detail.
I'll also list the risks.
There might be some debate and I might even learn a few things but, at the end of it all...
DMI will be dissected in every way possible.
This was done much the same way at my last bagger...AGY.
I think most AGY investors know as much about the company as MGMT. does.
In theory...that's how it's supposed to be.
****
The reasons I think DMI will be a 30+ (not just a 10-20 bagger)
1. Location of its salar:
Hombre Muerto is simply the best Brine Salar in the world (outside of Chile) high Li, low Mg.
-NYSE's FMC (one of the BIG 3 Li players) and profitability mining HM for 20+ years.
-GXY's SDV with a NPV of 1.4 billion and re-affirmed that valuation this month by selling off the least valuable 1/3 to POSCO Inc (one of the largest metals companies in the world) for 280M U.S
Drill results, JORC's studies from 20 years ago...you name it. HM is the one!
*Of VERY important note... GXY keept the 2/3's that border adjacent to DMI's Candelas holding!
Simply the best nearology I've ever seen on the ASX.
More on this later...
2. New Management/revised board:
Juan Pablo Vargas de la Vega (JP) and soon to be director Raymond Liu are Lithium experts and more importantly...are MONEY guys.
Not GEOs or mining guys wrapped in a CEO/director suit. These guys know the who's who of Lithium.
JP is a former Patersons Securities Lithium analyst and is well connected in the Lithium space.
JP speaks Spanish, as he was born in Chile and has a Master's Degree, Economics, MSc Mineral Economics from Curtin University in Perth.
Unlike most Aussie mining execs...JP will be living in Argentina for the next 12 months til the JORC and ponds/processing plant are set-up.
Raymond is based in HK and is a money manager which will give DMI a large advantage into potential off-take deals from Li hungry China.
I've spoken and meet management and I'm impressed.
I'll discuss this in detail later.
3. Small MC compared to peers:
DMI ranks near the bottom.
There are many Lithium plays with less potential well above DMI MC. More importantly, one needs to look at DMI's neighbours on Hombre Muerto.
-GXY with a 1.3B MC which with a 1.4B NPV for its SDV (minus 280M U.S) is very much undervalued IMO.
-FMC which has been operational for the past 20+ years and is part of a 12B mutli-nation. FMC's Lithium business is going to be spun off later this year with a valuation of 3-3.5B U.S.
-Even NRG with a little piece on top has a 40M MC- and it's undervalued.
Yet, DMI sits with a tiny sub 15M MC.
Crazy, even at a 50M MC I believe DMI is very much undervalued.
More on this later...
4. Fast track approach:
DMI Management have openly said they plan on copying AGY's fast track approach. DMI plans to start drilling in the next 6-8 months. It's already applied for permits and JP and his team of locals...
I believe will get them sooner than standard foreign miners.
A JORC is less than 12 months away.
JP is currently in discussions with local pond and plant construction contractors, as I believe pond construction will happen sooner than most think.
Also...here is JP's incentive to get things done FAST...Performance Shares! Class A Upon delineating a JORC compliant resource of at least 80,000kt contained LCE 15,000,000
Class B Upon the commencement of commercial production from a pilot plant 10,000,000
I don't have this confirmed but, you can bet there's some kind of time limit on these Vendor Performance Shares.
More on this later...
5. Very tight float/Limited supply:
I'm an ex-brokerage guy and I've been studying stocks and MORE importantly stock prices for 25 years.
It's embarrassingly simple...
Stocks go up because there are more buyers than sellers. PERIOD!
Once you take mgmt % out. Then you take my shares and others I know are in and holding...the FLOAT of stock available from (the POST transaction SIO of 95M) to buy is very limited.
If you don't believe me...look at the daily supply. No one wants to sell.
Sure, there will be days when there is supply as DTers buy and dump but, the CORE float is tiny and getting smaller by the day.
Then take the MC of other Lithium stock investors that over time WILL find DMI.
Of the 95M SIO...you'll have MANY, many times that chasing DMI.
With other larger Lithium stock the floats are huge. Not with DMI.
Why, because DMO shareholders have DTOR and are holding tight. Very sticky.
More on this later...
6. MGMT. will own a LARGE amount of shares:
Current DMI mgmt. will own about 12% of DMI /Blue Sky Lithium POST transaction.
Blue Sky Lithium (JP'S Argentina company DMI is buying that has the HM assets) will own a massive amount of shares.
No one at DMI is on a high salary.
DMI mgmt. recently increased their holding. Everyone wants DMI to succeed and everyone is set-up with shares to make it happen.
7. Mgmt. have openly said they are STILL looking at land acquisitions:
As is...Candelas and Catalina (right in FMC's sand box) are company making... however, accord to ASX releases and JP directly...DMI is after MORE land.
JP is keeping it close to his chest but, there could be another NEW salar to come into the fold IMO.
JP and his local team who I understand are very experienced in Lithium are also pegging anything that looks decent.
One might say that all the good areas in ARG have been pegged? JP told me with a grin I won't soon forget...That's not necessarily true. Also, remember, once you peg land you MUST pay fees and if you aren't active...the local ARG government will take it away just as fast.
This is one of DMI's secret weapons I believe. JP is boots on the ground.
I look at every other Lithium company. They have the CEO that pops in every once and a while. Then salaried or hrly staff who stay in-country.
JP as DMI's MD and has authority to close deals, can hear things and get things done faster then others on the ASX or TSX.
Think about it... if an opportunity did come up...it could take weeks/months for an ASX or TSX company to act.
Plus, JP speaks Spanish.
More on this later...
8. The market and investors haven't discovered this stock due to a flood of "ME TOO" Lithium stocks:
DMI is very different and special and this can be PROVEN by just researching what they have and are planning to do already.
With THAT said....LOTS of SMART investors have already jumped on board and going to enjoy the ride.
More on this later...
9. Most ASX investor don't DTOR:
So I do.
One might say...If all these reasons/research point are correct...why doesn't DMI have a higher MC?
I could ask the same thing to investors in AGY at 2-3 cents.
Or GXY/GMM..
PLS, ORE 3-5 years ago..
You just need to DYOR...figure it out. Apply a safe RISK/REWARD.
Then buy the stock for the best price.
I'm in shock sometimes of the avg. ASX investor...who BTW might have millions.
The questions they ask AFTER they bought are shocking.
Or many times don't FULLY understand the company they own. (I'm guilty of that sometimes) Yet, it shouldn't happen.
Hey...It's up 50-100% and everyone says it's going up 5 bags. They can't be wrong...no they just can't!
Some might say DMI doesn't have drill results yet or a JORC or whatever. Well, there are stocks that do and you can buy them but, you only get a bag or 2 if you're lucky. Buying risk at the right discount is KEY to baggers.
The question nis what will DMI be trading at with drill results and a JORC?
I know DMI is undervalued, as there are a few things one needs to understand.
There also needs to be some faith in management. DMI is very different to 95% of the standard ASX juniors...you just need to DYOR to see it.
I have did that research...
You should too.
10. DMI doesn't need the big 15,000-50,000 ton production plant to 10 bag:
Everything DMI currently has planned...value it at 100M-250M...IF successful.
The risk isn't that great if one looks at DMI land package and what's in it.
I DARE say...and I don't know what the market will do but, DMI might ONLY need to drill and get a JORC?
Don't believe me? How much Li has GXY mined from HM? They just got a check for 280M U.S
DMI doesn't need to re-invent the wheel here OR create fireworks. They just need to show value and maybe process some brine.
More on this later...
11. Recent GEO results confirm by 3rd parties that Brine is in large quantities on DMI's massive Candelas holdings:
Again, I was just hoping for enough brine to get a JORC of 80,000- 100,000. Then we'd process 2,000+ of BG LCE and 10+ bagger here we come.
My logical brain said it was a river. However at 12km and ONLY 60 meters drop...we should get a few pockets of Brine. I WASN'T expecting bloody 400-600M. (The great Lake in North American are ONLY 80-100M deep!)
Do some basic math on the GEO results from 2 weeks ago. DMI was aiming for a 80,000 ton JORC. Now, that number is going to get blown out of the water. Math doesn't lie.
More on this NEXT...
12.
Possible company changing event with volcanic magna possibly covering massive Brine Lake in Candelas:
Again...Originally I thought Candelas was just a feeder river with some brine catchment areas.
With such a low MC and IF they meet their JORC ...a decent 5-Disallowed. If the brine extends under the edges and from looking at the recent CMAT results...they do.
DMI could be potentially sitting on a serious Brine resource equal to its neighbours. This recent event make DMI the easiest RISK/REWARD bet on the ASX for me.
STOP...
look at the results posted via a experience independent company who did GXY GEO's (and confirmed by a JORC later) just a few km's away...
Look at the Blue brine...Are you telling me the the bedrock magically is just off to the sides?
Even though we are in a valley?
I'm betting my net worth that that brine extends well into the sides and is covered by magna from Galan Calderra (the volcano that feeds HM its Lithium.) Let's put a JORC on that and see what happens.
Much more on this later...
13. Self funding/ No CR needed:
DMI current has 40M IN THE MONEY Options worth 5.5M. More then enough cash to fund drilling/JORC/ponds and possible plant constructions.
Pretty much covers it.
I believe DMI has ratified all its BSL shares so JP IF needed, could issue another 15%.
However, there's no need with the Oppies in the money.
If there was another 15% CR...I'd guess DMI would be at 40 as a min.
That's another 5-6M IF needed. I personally think we are 12+ months away from any new funding...unless we make an acquisition.
We have 2M+ in the bank now with a low burn rate and oppies to fund everything.
I've taken a very large position in DMI. A high % of my net worth.
I've leveraged myself personally and I strongly believe this is one of the best picks I've found in 25+ years.
The risk...everything goes wrong and this goes back to its shell price of 8-10 cents.
If the above goes RIGHT??...30+ bags.
Finding a good risk/reward ratio in a sub 15M is all you want.
That's investing.
IMO
DYOR!!
**VERY IMPORTANT**
All the above is IMO!!!!
Please DYOR!! I could be totally wrong in everything I’ve said.
DISCLOSURE: I'm an investor...here to make money. Not make others money. These posts are research notes for myself. I currently have a large holding in DMI. I may sell at any time and I won't be telling anyone beforehand. That's how the ASX and ASIC like it too. Otherwise it's illegal. Do your own research...don't just believe I'm correct and then blame me later if you lose $. I take full responsibility for my investments, as should YOU.
GLN Price at posting:
26.5¢ Sentiment: Buy Disclosure: Held
(20min delay)