I just give my honest opinion while trying to be as objective as I can. I try and be realistic but I lean towards optimism, otherwise I think life would be pretty gloomy in general. Getting to the truth is important to me though, so I kind of find the blind pessimist/optimists to be a tad silly because they will both invariably miss the mark. I like to be the contrarian and bet against the group as a whole. I am inclined to take an extra bullish slant at the moment because current sentiment is very negative and I feel that we have enough skeptics that anything negative will probably be discussed in an obsessive level of depth, so I'll focus more on the other side but I still acknowledge the other side exists.
Mexus is a really interesting company. That's why we are all here. Hundreds of juniors barely get a message a month, yet look at the hours people have expended reading this board. Mexus has obvious potential and obvious flaws that are visible to laymen, along with the whole gambit of junior mining risks. Focusing on just positives or negatives or locking your opinion in stone is not conducive to making rational decisions in the moment. What matters is the balance, the mental arithmetic. Making money in this sector requires an actor to be flexible and pragmatic - no one wants to ride a failing junior to zero and no one wants to sell precisely at the moment they should add to their positions or hold. As it is often said in this sector, the best time to buy is usually when you feel terrible doing it. I like the idea of using my own and other people's emotions as a barometer, it is actually very useful. These are the classic market emotions of fear and greed and they drive people in ways that generally make them lose money. As much as it pains me to say, even if the mine is successful there will still be lots of upset people that somehow lose money despite multiple opportunities to make out like a bandito.
Take the hypothetical purchase of $5,000 of stock at .24. Dollar cost averaging is almost always more effective than letting your emotions get ahead of you and buying a big lump sum and chasing a stock to a high point. Consider how much better shape the purchaser would be in if they DCA $500/month every other month for 20 months. This also demonstrates the importance of timing and the psychological impact of recent events. Message boards are haunted by these "I only bought once at the all time high and am here to complain," style posts. They are bears for life. Yet if that hypothetical person would have bought 9 months earlier their $5,000 would be worth over $1,000,000 at the same point. Anyone that makes a million in less than a year will be a diehard long and will probably be unshakable in their convictions. This is why most of us are here- those sorts of returns are nearly unheard of even in many risky sectors. That legendary gain involved not an ounce of gold, only rational appraisal. People seem to tell only one half of the story and I don't think that is a fair way to represent things, the omissions are glaring. I am amazed people can complain about terrible performance on a stock while ignoring the fact that this particular one has had several multi-thousand percent moves, and many multi-hundred percent short term waves to trade or sell. This includes some of the highest gains over the shortest periods in junior mining history. The truth is, if you are nimble and use your brain instead of your emotions there are obvious times to buy and sell portions of your positions while holding a core for the (hopefully) big win at the end.
I probably haven't mentioned this before because it isn't my style but maybe the illustration will beneficial. I bought Mexus below .01 and I sold above .21, one of the only sales I have made in this stock. Was that pure luck? Not at all. I have repeated similar scenarios too many times for it to be chance. A 600k market cap for Mexus was absurdly low and undervalued, worth a buy, and 200 million with no production was overvalued compared to its peers and worth a sell. I wait for the moves because I am very patient and I don't generally let my emotions rule my behaviour. All luck, people could say...except I keep doing it consistently over the years, on multiple occasions and stocks. This is the same sort of mindset that is important in mining. You have to consistently move ahead knowing there will be ample impediments, grind out all the tedious requirements that mines need, and then move ahead with a degree of perspective while being mindful of the pitfalls along the way. Since mining is so cyclical, I believe that mines should aggressively expand in bear markets and sell during bulls. What this can often mean in practical terms is that mines and juniors can often price stagnate for years through no direct fault of their own... and still end up being an absurd bargain despite or perhaps because of the prevailing sentiment. These stagnation/erosion trends allow a rational investor to buy quality assets at bear market values. Why do great stocks sometimes remain cheap for years, especially in the mining industry? I think this is relevant because the charts will often look like MXSG's and then when a new bull market inevitably arises, like the dawn inexorably breaking from the night, a rising tide will lift all boats regardless of quality (having less holes is preferable). Many will make fortunes off crappy stocks that will never mine an ounce. Being invested in already profitable miners is the layup, low risk, quite high reward strategy, while trying to narrow down high risk, high reward juniors with high exploration and near term production potential for your speculative slots/lottery ticket.
I think shareholder reactions to the latest PR, while emotional and angry, were mostly justified. Mexus has always been weak in this regard. There was nothing in PRs lately to signal or give us a heads up for the disappointing numbers announced. I don't care about 8oz of gold, I do care about if they can increase and improve on it. Keep doubling it and people will see progress and the trickle can easily become a flood.
An example that may help people here might be the Seabee turnaround story, about a famous mine in Saskatchewan. The mine has had many good times and bad, usually coinciding with a bull and bear market along with some company specifics. What is important is that when I looked at them the second time I found they were then losing money. They had some management and direction changes and gradually this going concern shifted - following a clearly observable path of improvement. First they lost a lot, then less money per oz, and then they quickly shifted to earning a small profit. Then each quarter improved upon the last, inspiring ever higher valuations. It was clear their strategy was working, so they kept going, choosing to mine only higher grades instead of stuff they would lose money on (what a strategy!). Their profits kept increasing and this was the perfect time to gradually accumulate a large position and hold until their profits expanded to a level that made them highly undervalued from the perspective of a value investor. Huge gains, lovely buy-out, low risk, high reward. There were those who said Seabee could never be turned around at the prevailing gold prices or that "high grading" their mine would lead to sterilization of reserves and rapid depletion. Failure begets failure, no one learns anything, new management can't fix the mistakes of the past or change the economics of the deposit in the ground etc. They were resoundingly wrong and eventually the profits grew so large that there was not a single critic or bearish analyst remaining by the time they were acquired for a hefty premium after a blistering rally. Mexus can follow the same route.
The only thing about that last Mexus PR that disturbed me was implied 0.2% recovery rate. That is basically zero. I never would have considered 0.2%, that's the lowest I have ever heard of in this style of operation under any conditions. Their own previous tests were 76% and that is inline with all the neighbours. They need to do whatever is necessary to get themselves in shape as a normal heap leap operation. There is nothing preventing them from improving and learning from their mistakes. Even poor results have a small bright side. For like the great investor Klarman points out in Margin of Safety, a stock becomes MORE attractive, not less, as its price declines (as long as its intrinsic value is stable or increasing). That is somewhat subjective, so make up your own minds. It is also easy to improve on such a low number and rebuild confidence going forward like Seabee did.
Losing some money on a high risk - high reward stock sucks but it certainly doesn't mean that those types of risks are not worth taking if it meets your circumstances. No one wants to lose their principle but I would venture the same people would also feel cheated if they gave in to their emotions and talked themselves out of a good bet to turn the price of a modest used vehicle into a fortune that could change their life forever.
For over a decade I have been working on a very large writing project. I could have done something simple and easy but chose to instead to pursue something most would consider impossible or absurdly difficult because I believe that the long term payoff in terms of the narrative and monetary value will be immense. I will merely say this: ambitious, worthwhile projects take time and effort. It requires reworking things and having your mistakes challenged, rectified and then polished. Ambitious projects are the most satisfying and rewarding activities in the world because, even though in truth most such ideas perish, those that succeed literally change the world, and nearly always for the better. I try not to occupy my time or money with anything less meaningful. Mining is synonymous with risk and wealth creation. A bonanza can form an industrial dynasty, its wealth rippling through time and across huge areas.
It all comes down to common sense. If another year goes by and they still are floundering and at billions of shares outstanding then that isn't going to work out well. Yet they have good grades at the surface and logistical advantages compared to other nearby mines. If they can figure out how to leach, Mexus can too. The 8bros vat leach has some advantages too, mainly in how easy it should be for them to test and improve recoveries while maintaining stricter controls. Quicker cycle time also means more batches to test and refine. The high grades imply low initial costs per oz. I don't know if this will work out smoothly from the get-go (probably not) but it is the kind of thing I like about Mexus and would speculate on. Low cost of vats and initial startup equipment with potentially quick production and high margins. Even at a 50-50 chance that is still a compelling risk and reward, something that could generate millions for thousands. Great, if it works. If not, bad. I think odds are it will work out and that it should be easier to recover from the vat than whatever salty business is now going on at Elena.
I am still confident Mexus will crack their metallurgy and the trickle will one day become a steady flow, they just have to do it in a timely manner or the profit potential of current holders will diminish.
I hope everyone has a great day. Stocks go up and down, but you don't have to let them drag your mood along too.
